Trade tensions drive market shifts as global stocks experience fluctuations

Trade tensions, particularly between the US and its key trading partners, dampened investor sentiment on Friday, with the S&P 500 closing at 5 074.08, marking a 5.97% decline. The Dow Jones Industrial Average fell over 2 200 points, indicating a 5.50% fall, while the Nasdaq Composite, heavily weighted towards technology stocks, entered bear market territory, declining by 5.82% to close at 15 587.79. The Magnificent 7 stocks, which include Nvidia, Apple and Amazon, collectively lost $1.55 trillion in market capitalisation over the week. The decline in US equities was driven by investor concerns over tariffs, including a 10% general tariff and harsher duties on imports from China, Japan and the European Union.

European markets also took a hit. The FTSE 100 index dropped to 8 091.68 (-4.52%) as investors reacted to the growing uncertainty of tariff disputes, which weighed heavily on exporters, with companies in sectors such as automotive, pharmaceuticals and energy seeing significant declines. The Stoxx 600 Index closed at 545.72 (-0.04%), while the Stoxx 50 Index fell by 1.80%, with the DAX closing at 20 770.85 decreasing by 4.36%. This downturn was driven by concerns about how the US tariffs would impact Europe’s large manufacturing sector, which is heavily intertwined with global supply chains.

Asian markets saw significant declines as well, with the Hang Seng Index closing 1.61% lower at 22 829.17 and the Nikkei shedding 2.75% to close at 33 780.58. The Shanghai Composite Index in China fell by a more modest 0.29%, closing at 3 340.28.

In South Africa, the ALSI decreased by 5.26%, closing at 81 553.66, emulating the broader global trend. Despite some resilience in the economy, with a 0.60% quarter-on-quarter GDP growth in Q4 2024, sectors such as mining and manufacturing contracted, contributing to a mixed performance. South Africa's economic growth forecast for 2025 has been set at approximately 1.70%, reflecting ongoing challenges related to weak demand and supply issues. The rand continued to fluctuate, closing at R19.51 against the US dollar.

Commodities were similarly affected by the trade turmoil. Gold prices, typically a safe-haven asset during uncertainty, closed lower at $3 027.29 per ounce (-3.40%). In the oil market, Brent crude oil prices faced declines, trading at $66.06 per barrel as China imposed a steep 34% tariff on US oil imports. These developments were exacerbated by OPEC+ increasing production levels, adding further downward pressure on oil prices.