US President Donald Trump’s tariff war has plunged global markets into turmoil, with American markets facing the brunt of the damage. The dollar has weakened significantly, and there is widespread concern that the tariffs may push the US economy into a recession.
The Indian markets, meanwhile, ended Thursday with a slight loss, buoyed by the hope that India might gain some relief on countervailing duties. However, early indicators suggest that losses could continue today as well. Unless the government comes forward with a formal assurance, market weakness is likely to persist.
Talks regarding a trade agreement with the US have reportedly been fast-tracked, and there could be some positive developments in the coming days.
However, if the US does slip into a recession, any official assurances might not offer much comfort.
In the derivatives market, the Gift Nifty closed at 23,226 on Thursday night and opened slightly lower at 23,205 this morning, signalling that the Indian market too may start the day in the red.
European markets also ended Thursday with steep losses of over three percent. The fear that tariff hikes would affect sales pulled down shares of leading liquor brands as well.
The US markets experienced their sharpest fall since the COVID pandemic. Over 400 shares in the S&P 500 closed lower on Thursday. The index is now down 12 percent from its record high in February.
Global brands with manufacturing facilities outside the US were particularly affected – Nike dropped by 14 percent, Apple by 9 percent, Nvidia by 8 percent, and Elon Musk’s Tesla by 5 percent.
Economists at JP Morgan believe that unless Trump rolls back the tariffs announced on Wednesday, an economic recession is inevitable. Trump, however, tried to reassure the public by claiming that markets would bounce back, the country would surge ahead, and other nations would scramble to strike deals with the US.
On Thursday, the Dow Jones index plunged by 1,679.39 points (3.98%) to close at 40,545.93. The S&P 500 fell by 274.45 points (4.84%) to 5,396.52. The Nasdaq dropped by 1,050.44 points (5.97%) to end at 16,550.61.
US futures also remain weak. The Dow is down by 0.25 percent, the S&P by 0.17 percent, although the Nasdaq has risen slightly by 0.07 percent.
Asian markets too are in decline. Japan’s Nikkei opened two percent lower, and South Korea’s Kospi index has fallen by one-and-a-half percent.
The Indian market, however, stood relatively firm. The belief that Trump may agree to reduce countervailing duties for India helped the markets avoid a major crash.
The government has hinted that a trade agreement with the US could be reached within weeks. If tariffs are harmonised to a universal rate of 10 percent with exemptions removed, Indian exports would face fewer hurdles.
Competitor nations might still face higher tariffs. However, India may have to significantly reduce its own import duties and ease various import restrictions in return.
On Thursday, the Nifty fell by 82.25 points (0.35%) to close at 23,250.10. The Sensex dropped by 322.08 points (0.42%) to end at 76,295.36. Meanwhile, the Bank Nifty rose by 249.30 points (0.49%) to 51,597.35. The Midcap index gained 0.21 percent to 52,162.15, and the Small Cap index rose by 0.58 percent to close at 16,255.45.
For the third straight day, market breadth remained in favour of gainers. On the BSE, 2,788 shares advanced while 1,212 declined. On the NSE, 2,057 stocks closed higher, while only 829 ended lower.
On the NSE, 37 stocks hit their 52-week highs, compared to 24 that touched their lows. As many as 287 stocks reached their upper circuits, whereas only 25 hit their lower circuits.
Foreign institutional investors sold shares worth ₹2,806 crore in the cash market on Thursday, while domestic institutional investors purchased shares worth ₹221.47 crore.
The market sentiment remained one of cautious optimism. Chartists see the Nifty holding above 23,130 as a positive sign.
According to chart patterns, the Nifty is likely to find support at 23,170 and 23,070, with resistance expected at 23,300 and 23,400 levels.
Gold prices saw a decline due to profit booking, as the heightened uncertainty began to ease. Market sentiment now suggests that gold may not rally significantly in the short term. However, continued volatility in equities and the dollar, or a looming recession, could shift this outlook. Otherwise, the gold market may be entering a phase of consolidation or accumulation after several weeks of steep climbs.
On Thursday, gold closed lower at $3,115.70 per ounce after a highly volatile session. It traded at around $3,112 per ounce this morning.
In Kerala, the gold price rose by ₹400 per sovereign on Thursday to reach a record high of ₹68,480. Prices are likely to see a correction today.
Silver prices also fell to $31.98 per ounce. The decline is expected to continue.
The dollar index fell by over two percent on Thursday, closing at 102.07. This morning it slipped further to 101.87. The index has now erased all gains made since Trump became president. Trump reportedly has no objection to a weaker dollar, believing that a softer currency would support US exports.
Meanwhile, US bond prices continued to climb on Thursday, causing yields to fall. The yield on 10-year Treasury notes declined to 4.028 percent. The bond market appears to be signalling an increased risk of recession in the US.
Crude oil prices also slumped on Thursday, with Brent crude falling by nearly seven percent. The decision by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), to increase daily output by 411,000 barrels caused the price drop.
The expected rise was only 140,000 barrels per day, and this higher-than-expected increase has dampened market sentiment. The hike will be implemented in May. Countries like Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman are among those ramping up production.
Brent crude fell below $70 before recovering slightly to close at $70.14. This morning, it dipped again to $69.87. WTI crude is trading at $66.67, and UAE’s Murban crude is at $72.07 per barrel.
Cryptocurrencies too were hit by Trump’s announcements. Bitcoin fluctuated between $81,000 and $85,000 and is currently trading above $83,000.
Ethereum, after breaching the $1,900 mark, has dipped to around $1,810.
