Tariff Horror: Who won and lost from Trump's tariffs
America's "Liberation Day," with the imposition of record import duties from most foreign countries, has been the most acute shock to global markets since at least the beginning of the pandemic in 2020. In many ways, the collapse of quotations was comparable to the collapse of Lehman Brothers in 2008 or the "Black Monday" of 1929. The markets continue to chatter when a drop or a rise of several percent can alternate within a few minutes. However, not everything that is traded on the stock exchanges has sunk equally. Some assets, on the contrary, are growing in value. Who wins and who loses in one of the craziest weeks in the history of global financial markets — in the Izvestia article.
Stock market: Collapse around the world
The heaviest losses from the escalation of trade wars were suffered by the quotes of companies. In the United States, the S&P 500 index, representing the widest possible market, sank by 14% in less than three sessions. Thus, it surpassed the collapse of October 2008, when the global financial crisis was in full swing. The last time such a decline was observed was during "Black Monday" in 1987. The decline was so strong that it came close to the conditional mark of the beginning of the "bear market", which is usually fixed when the main index falls by 20% to the maximum (in our case, reached on February 25).
In total, the American stock market has lost about 5 trillion in market capitalization. The recession affected almost all companies and almost all the richest people in the United States, each of whom lost billions of dollars (some, such as Elon Musk— tens of billions).
The exception was 90-year-old Warren Buffett, who started going into cash early last year. During the year, he sold assets worth $134 billion and came out fully equipped for the current crisis. While everyone else was losing money, he increased his personal financial position by $11 billion, thus equaling Bill Gates. It has not yet been reported how much his investment company Berkshire Hathaway earned.
US tariffs are a global problem, so the stock market crisis is expected to reach a global level. China's trading platforms were shaken the most, because it was against the world's second largest economy that the most stringent duties were imposed. The Shanghai Composite index lost more than 250 points, or 8%, in a couple of days before the sovereign wealth fund began buying shares. Without this involvement, the recession could have been much deeper.
In Europe, the main indexes of Germany, France and the UK lost more than 10%. This stopped their rise, which was observed against the background of optimism caused by the CDU/CSU victory in the German elections and the subsequent adoption in the Bundestag of an economic stimulus package of hundreds of billions of euros. However, the fear of US duties and a possible response from the European Union turned out to be stronger than these hopes.
Russia: The fear index is at its limit
In recent years, Russia has become somewhat detached from the global economic environment. Even oil prices have been weakly correlated with the movement of the domestic stock exchange for a long time. However, this time the effect was so strong that it fully manifested itself on our stock market.
Since April 2, the Moscow Exchange index has lost more than 350 points, or about 12%. It wasn't until April 8 that there was a slight rebound, when quotes rose by 100 points. To be fair, the tariff wars rather fueled the general disappointment of investors, who during the previous month had been too optimistic about the end of the conflict in Ukraine and the lowering of the Central Bank's key interest rate.
Analysts believe that the Russian market may continue to storm under certain conditions.
— We are waiting for new introductory duties on China, which may be increased by another 50%, as well as on negotiations between the United States and Iran, said Kirill Klimentiev, an analyst at Cifra Broker. — The outcome of each event has a significant impact on the Russian market, but let me remind you that we were trading at about 2,400 points in December 2024, when the market was planning a rate increase to 23% and up to 25% subsequently, and there was no progress in the negotiations. The situation is much better now, but additional negativity may lead to a correction of up to 2,600 points on the Moscow Exchange index.
In turn, Mikhail Zeltser, an expert on the stock market at BCS World of Investments, is more optimistic, noting that volatility usually expands at the peak of an exchange panic, which makes it difficult to determine the price bottom.
"But there is a certain leading indicator of sentiment," the expert clarifies. — Just yesterday, there was an abnormal jump in the RVI "fear index", comparable in scale to September 2022. The Moscow Stock Exchange index and the RVI volatility index are moving in reverse. It was impossible to catch the minimum point in the stock index, but it was clear in terms of time against the background of the off—scale RVI that the moment of reversal was approaching.
He added that everything happened exactly as predicted by the models.:
— The stock index gained 6% from the bottom in a sharp rebound. Most likely, April 7 was the culmination of the sales. There will be echoes — uncertainty factors remain, and speculators will continue to sway, but the current price levels in the market are already 35% lower than the levels of 3,600 points that are fundamentally justified for the Moscow Exchange index.
Black days of black gold
In many ways, the panic in the Russian market was caused by the acute situation with oil prices, which lost about $10 per barrel within a few days. By the evening of April 8, Brent was trading around $64 per barrel, but before that it had gone below $63. Investors' concern about oil demand is understandable: if tariffs plunge the global economy into recession, demand for black gold may decrease sharply.
Meanwhile, OPEC+ has already announced an increase in production in May by 400,000 barrels per day. The combination of these factors is not good for the global oil market. It should be noted that the Russian Urals export brand has sunk to $50 per barrel (in fairness, Urals is far from all Russian oil, but the figures are still indicative).
Almost the same "massacre" occurred in the cryptocurrency market. Bitcoin has dropped by $8000 since April 2. The situation is common for Bitcoin quotes, although this time it was not caused by any internal market problems. Rather, it confirmed the fact that bitcoin is not the best protection against serious troubles in the financial markets.
Government debt is trending again
Despite the overall extremely gloomy background, there were still sectors in the market that remained in the black or, at least, did not sink much. In particular, gold fell by only $170 to the peak that was reached just on April 2 ($3167). The decline is due to the fact that investors decided to lock in profits, which arose after three months of almost continuous growth — a total of almost $ 600. The current correction is almost certainly temporary, as the main factors favoring the rise of gold remain in force.
The two hardest currencies in the world, the Swiss franc and the Japanese yen, remained in the black. In these countries, regulators periodically try to limit the strengthening of national monetary units during crises.
Finally, the US government debt has become another beneficiary. 10-year bond yields fell from 4.2% to 3.9% in a couple of days. Investors naturally tend to "safe havens," the most important of which are, at least for now, U.S. government securities.
On the other hand, there are still a few such sudden movements like those that we saw last week, and their unshakable status may be revised. However, evil tongues say that it is very beneficial for the White House to raise tariffs in terms of state finances: budget revenues from duties will increase and interest payments on bonds will decrease. Both are very useful for solving the problem of public debt repayment, which has escalated to the limit. Even if such steps can cause considerable harm to the broader economy beyond fiscal issues.
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