U.S. tariff hike sparks global market turmoil, Russia surges
Global stock indices are noticeably falling on Tuesday. The reason is straightforward: the United States has introduced new tariffs on goods from Canada, Mexico, and China. President Donald Trump's decision has sparked fears of a global trade war, which could hinder economic growth. The mood in Russia, however, is different.
International markets are still reacting intensely to Donald Trump's decision. The President of the United States implemented 25% tariffs at midnight from Monday to Tuesday (Eastern Time) on all goods imported from Mexico and Canada (except Canadian crude oil, which faces a 10% tax) and increased tariffs on products from China from 10% to 20%. According to economist Scott Lincicome from the Cato Institute, this represents one of the largest single tax increases in U.S. history, estimated at around $360 billion. This decision affects the United States' three largest trading partners, potentially leading to significant consequences for both the American and global economies.
Markets react to Trump's move
The U.S. decision does not benefit most markets. The German DAX index fell by more than 1.5% to below 22,800 points, retreating from its record level reached the day before.
Among the poorest performers on the German market were BMW (-3.5%), Stellantis (-3.5%), Mercedes-Benz (-2.8%), and Volkswagen (-2.4%). Meanwhile, stocks in the defence sector continued to rise after President Trump suspended all military aid to Ukraine. Ursula von der Leyen, the President of the European Commission, presented a defence plan that could mobilize nearly 800 billion euros ($1.2 trillion CAD) for Europe.
The Polish market also reacts
The French CAC 40 index lost 1%, dropping to 8,117 points on Tuesday, a far cry from the nearly record level achieved during the previous session. Investor sentiment worsened due to new U.S. tariffs on Canada, Mexico, and China. Stellantis NV's shares performed the worst among individual companies, falling by 4.1% to their lowest level in two months.
Luxury goods sector companies also performed poorly—Kering dropped by 2.6%, LVMH by 2%, and Hermès by 1.6%. In contrast, shares of defence company Thales rose by 10.3%, reaching a new all-time high. The company exceeded profit expectations for 2024 and raised its sales and profitability forecasts for 2025.
In the American market, futures contracts stabilized on Tuesday after a turbulent start to the week. In Monday's regular trading session, the Dow Jones index fell by 1.48%, the S&P 500 by 1.76%, and the Nasdaq Composite by 2.64%. The leading index opened higher but quickly changed direction in the afternoon when President Trump confirmed that the 25% tariffs on Canada and Mexico would take effect on Tuesday, stating that "there is no more room" for negotiations.
In the U.S. technology market, large-cap companies suffered the biggest losses, including Nvidia (-8.7%), Tesla (-2.8%), Microsoft (-2.1%), Amazon (-3.4%), and Broadcom (-6.1%).
Stock prices are not only influenced by tariff decisions. Investors are currently focusing on upcoming financial reports from companies like AutoZone, Best Buy, CrowdStrike, and Target, which are expected to be released on Tuesday.
The Russian market is celebrating success
While Western markets face difficulties, the MOEX Russia index held steady at 3,300 points in February, reaching its highest level since May last year. Russian assets show strong momentum.
Russian investors' hopes may have a single source. U.S. officials have adopted softer rhetoric toward Russia and criticized Ukraine's approach to wartime law, raising expectations that the U.S. might lift sanctions and reintegrate Russian capital markets into the global financial system. Gazprom shares have risen by over 70% since hitting record lows in November last year, while Sberbank, Rosneft, and Lukoil have also reached six-month highs.
