'Tariff'ied markets in global meltdown

Major stock indices fell again in volatile trading across the globe on Monday as US President Donald Trump said he will impose an additional 50% tariff on China if Beijing did not withdraw its retaliatory tariffs on the US.

Also, the White House denied a report that Trump was considering a 90-day pause in tariffs for all countries except China. The report, which the White House said was “fake news”, had briefly turned US stocks positive earlier.

Hours before Trump’s announcement, Sensex and Nifty logged their worst single-day decline in 10 months amid fears that the US President’s policies on reciprocal tariffs may lead to a recession. The wealth of Indian investors eroded sharply by Rs 14 lakh crore. In a horrible day for investors, the 30-share BSE benchmark Sensex tanked 2,226.79 points, or 2.95 per cent, to settle at 73,137.90. During the day, the benchmark index slumped 3,939.68 points, or 5.22 per cent, to 71,425.01.

The NSE Nifty tumbled 742.85 points, or 3.24 per cent, to settle at 22,161.60. Intra-day, the benchmark dropped 1,160.8 points, or 5.06 per cent, to 21,743.65.

Prior to Monday’s debacle, on June 4 last year, the Sensex had nosedived 4,389.73 points, or 5.74 per cent, to close at 72,079.05. The Nifty had ended at 21,884.50, a sharp decline of 1,379.40 points, or 5.93 per cent.

Sensex and Nifty had previously tumbled over 13 per cent on March 23, 2020, when lockdown was imposed due to the Covid-19 pandemic.

The global stock market rout has wiped more than $10 trillion off major markets as concerns about the economic damage unleashed by Trump’s tariffs spiral.

In the US, the markets remained turbulent amid the changing headlines. Traders bet the increasing risk of recession could result in the Federal Reserve cutting interest rates as early as May.

Stocks fell sharply at the opening, and the S&P 500 had been on pace to confirm a bear market amid concern Trump was showing no sign of backing away from his sweeping tariff plans.

The Dow Jones Industrial Average fell 629.33 points, or 1.64 per cent, to 37,685.53, the S&P 500 dropped 56.14 points, or 1.14 per cent, to 5,016.43 and the Nasdaq Composite fell 129.97 points, or 0.88 per cent, to 15,450.15.

The pain also engulfed European stocks, with recent market favourites such as defence shares particularly hurt as investors were forced to sell. The pan-European STOXX 600 index fell 4.54 per cent.

In Asia, Hong Kong’s Hang Seng’s 13 per cent one-day slump was the largest since 1997, while in mainland China the blue-chip CSI 300 index was down 7 per cent, only finding a floor when state media reported China’s sovereign fund Central Huijin was a buyer.