The global trade war took a fierce turn as US President Donald Trump announced sweeping import tariffs on a wide range of countries, sparing no one.
The tariff rates have caught global markets off guard, throwing most analysts’ predictions off course. The announcement sent a ripple of panic across financial markets. US market futures tumbled over 3 percent, while Asian markets saw declines ranging between 1 and 3 percent. The Indian stock market is also expected to feel the heat when trading begins.
In a slightly softening tone, US Treasury Secretary Scott Besent later hinted that countries willing to reduce import duties or ease restrictions on imports might be considered for proportionate relief. India's official response is awaited and is likely to be announced in Parliament today.
The derivatives market has already begun reflecting investor anxiety. Gift Nifty closed at 23,137 on Wednesday night and opened slightly higher at 23,150 this morning, suggesting a shaky start for the Indian market. Meanwhile, European markets ended Wednesday in the red, clearly spooked by the tariff announcement.
Interestingly, US markets had ended Wednesday on a high note, driven by optimism that the new tariff policy would help strengthen domestic manufacturing and bolster the American economy. The Dow Jones climbed 235.36 points to close at 42,225.32, the S&P 500 rose by 37.90 points to 5,670.97, and the Nasdaq added 151.15 points, ending at 17,601.05. However, this optimism was short-lived. After Trump made the announcement, US market futures took a steep dive. The Dow dropped 2.5 percent, the S&P sank 3.32 percent, and the Nasdaq plummeted by 4.25 percent.
Asian markets did not fare any better. Japan’s Nikkei Index slipped over 3.5 percent, and Chinese stock markets also registered a significant decline.
Back in India, Wednesday’s market had closed on a positive note, largely fuelled by the belief that Trump would not go ahead with such aggressive measures. Government sources had even dropped vague hints of a possible breakthrough, which buoyed market sentiment. For the second consecutive day, market breadth remained in favour of gains. On the BSE, 2,818 stocks advanced while 1,133 declined. On the NSE, 2,148 rose and 757 fell.
Despite the positive close, certain signals showed underlying caution. A total of 39 stocks on NSE touched their 52-week highs while 43 hit their yearly lows. A total of 247 stocks hit upper circuit limits, while only 26 touched the lower circuits. Foreign institutional investors (FIIs) were net sellers, offloading shares worth ₹1,538.88 crore in the cash segment. Meanwhile, domestic institutional investors (DIIs) bought ₹2,808.83 crore worth of shares, absorbing much of the selling pressure.
Nifty closed 166.65 points higher at 23,332.35, while the Sensex surged 592.93 points to end at 76,617.44. Bank Nifty, too, posted a gain of 520.55 points to close at 51,348.05. The mid-cap index climbed 1.61 percent to 52,053.20, and the small-cap index rose by 1.12 percent, ending the day at 16,162.45.
Investor sentiment, though cautiously optimistic during the trading session, quickly turned jittery after Trump’s announcement. Technical charts now indicate that if Nifty fails to hold the support levels at 23,000 to 22,900, a steeper correction may be on the cards. Immediate support can be expected around 23,205 and 23,090, with resistance likely at 23,350 and 23,470.
Gold, meanwhile, is showing signs of strength again. Though Trump has spared gold imports from the new tariffs, the tone and scale of the trade war seem harsher than expected. This renewed uncertainty has pushed gold prices higher.
On Wednesday, gold closed at $3,140.20 per ounce. Following Trump’s announcement, it shot up to $3,164.90 and was trading at $3,158.90 on Thursday morning. In Kerala, the price per sovereign remained unchanged on Wednesday, holding steady at the all-time high of ₹68,080.
However, changes in the rupee-dollar exchange rate could trigger price movements today. Silver also followed suit, with prices climbing to $33.86 per ounce.
The dollar index, which had closed slightly lower at 103.81 on Wednesday, dipped further to 103.07 in early morning trade. Meanwhile, US bond prices jumped, pushing yields lower. The yield on 10-year US treasury bonds fell to 4.06 percent, as the bond market began pricing in a higher risk of economic slowdown.
Crude oil prices, which had held steady on Wednesday, have now started to decline sharply. Trump’s tariff move is being seen as a major threat to global trade, potentially dampening demand for oil. This has raised concerns among oil-exporting nations. OPEC and OPEC Plus, which includes Russia, are set to hold a ministerial-level meeting today. While the meeting was originally called to discuss increasing crude output, the changing scenario may force them to shelve that plan.
Brent crude had risen to $74.95 on Wednesday but fell to $73.24 by Thursday morning. WTI crude dropped 3 percent to $69.91, while UAE’s Murban crude stood at $75.18.
The cryptocurrency market wasn’t spared either. Prices initially dropped following the announcement but soon bounced back. Bitcoin fell to $82,270 before recovering to $83,700, while Ethereum hovered near the $1,830 mark.
