Stock markets plummeted on recession fears linked to Trump’s trade policies, with major European indices and Wall Street indices experiencing significant declines. Analysts expressed concerns over the economic impact of tariffs and Trump’s ambiguous recession comments. The euro strengthened against the dollar amid geopolitical shifts, while airline stocks fell due to reduced earnings forecasts. Oil prices rose on a weaker dollar and potential sanctions against Iran, while Bitcoin dropped in value.
Stock Markets Experience Decline Amid Recession Fears
The stock markets faced a downturn on Tuesday, influenced by heightened concerns about a potential recession in the United States, which many attribute to Donald Trump’s trade policies. This decline followed a significant drop in sales, signaling investor anxiety.
In Europe, by 2 PM GMT, major indices reflected this trend: Paris saw a decrease of 1.03%, Frankfurt dropped by 0.88%, London fell by 1.05%, and Milan experienced a decline of 1.16%. On Wall Street, the situation was similarly grim, with the Dow Jones down 0.99%, the NASDAQ index slipping by 0.09%, and the S&P 500 index decreasing by 0.55%.
Analysts Weigh In on Market Sentiment
Market analyst Fawad Razaqzada from City Index noted that global indices are suffering after Monday’s declines on Wall Street, primarily fueled by fears stemming from Trump’s ongoing trade war. The apprehension surrounding the economic ramifications of tariffs imposed or threatened by Trump against various countries, including China, Mexico, and Canada, has intensified.
Concerns have escalated since a recent interview where President Trump was evasive about the potential for a recession, instead referring to an anticipated “period of transition.” Bjarne Schieldrop, an analyst at SEB, emphasized the prevailing “very bearish” sentiment in the markets, driven by worries over the damage Trump may inflict on the U.S. economy and the rising risks of recession, despite his reassurances about long-term improvements.
Investors are also keeping a close eye on political developments in Germany, particularly as the Greens have indicated they might not support the substantial investment plan proposed by the incoming government of Friedrich Merz, which had previously been well-received by the markets.
On the bond market, the benchmark ten-year German bond yield rose to 2.89%, up from 2.83% the previous day.
The euro is experiencing a notable rebound against the dollar, rising by 0.74% to 1.0919 dollars. Analysts from Natixis attribute this shift to recent geopolitical changes, particularly the easing tensions between the U.S. and Russia concerning Ukraine, alongside Trump’s security concerns for Europe, which prompted a swift increase in defense spending across European nations.
In the airline industry, stocks are facing challenges following Delta Air Lines’ announcement of reduced earnings forecasts due to waning consumer confidence in the U.S. By 2 PM GMT, Air France-KLM saw a significant drop of 5.82%, while Lufthansa decreased by 3.89%. In London, EasyJet fell by 0.73% and Ryanair by 1.61%.
In a related development, Air France-KLM and Lufthansa have made separate offers to acquire stakes in Air Europa, with proposals of 300 and 240 million euros, respectively, as reported by Spanish media.
In a surprising move, the British online fashion retailer Boohoo, which has been struggling against competitors like Shein, announced that it will rebrand itself as “Debenhams Group.” This name change comes after its acquisition of the Debenhams department store brand in 2021, following the latter’s bankruptcy.
On the energy front, oil prices are showing positive movement, aided by a weakened dollar and the prospect of increased U.S. sanctions against Iran. By 2 PM GMT, North Sea Brent crude climbed by 1.47% to 70.30 dollars per barrel, while West Texas Intermediate (WTI) rose by 1.54% to 67.05 dollars.
In the cryptocurrency market, Bitcoin has seen a decrease of 3.54%, bringing its value down to 81,037 dollars.