NEW YORK, New York - U.S, and global financial markets were in crisis Friday as China increased its tariffs on the U.S. to 125 percent, exacerbating a trade war that has gripped the globe. The U.S. dollar was sold off sharply, as equity markets, commodities, bonds, and currencies, faced volatility unseen since the Global Financial Crisis of 2008.
By Friday as markets wound down, investors were missing Joe Biden.
When Biden's term ended on Monday 20 January this year, the last trading day of his term, Friday 17 January 2025, he had overseen multiple records in the Dow Jones industrial average, the Nasdaq Composite and the Standard and Poor's 500.
By Friday, just short of 3 months into the Trump administration's term, the wreckage was plain for the world to see. The stark reality was sinking in as we compared where the markets were when Biden's term ended on January 20 this year. On the last trading day under his watch, the Dow Jones index closed at 43,087.83. On Friday iis closed at 40,212.71, more than seven percent weaker,.
The Nasdaq Composite traded on 17 January 2025 at 19,630.20. On Friday it closed at 16,724, down 2,906 points or 14.80 percent,
The Standard and Poor's 500 farewelled the Biden presidency at 5,996.96. On Friday it was last quoted at 5,363, off by 11.80 percent.
When Biden left office, the U.S,. dollar index was at 109.40. It is currently around 100, down more than nine percent.
The euro last traded under Biden at 1.0275. On Friday, in late afternoon trading in New York it was fetching 1.1344, after earlier hitting a multi-year high of 1.1473. The loss between Biden and Trump: 10.6 percent.
The Japanese yen was changing hands at 156.15 under Biden. By Friday it had advanced to 143.53, ahead by 8.79 percent.
The British pound was at 1.2170 when Biden left offifce. It is now ahead at 130.75. A gain of 6.4 percent.
The Swiss franc was at 0.9155. It now trades significantly higher at 0.8152. This means thre franc is now 12.30 percent stronger than before Trump assumed the presidency.
Fast forward just 80 days: The price of gold as Biden was farewelled was $2,714.81.It is now surpassed $3,200 an ounce.
Trade tariffs continued to set the scene Friday as China ramped up its tariffs to 125 percent but said it would no longer engage with the U.S. as it took to strengthening business ties with Europe, and other countries. China's President Xi was meetiing in Beijing with his Spanish counterpart on Friday, while he plans to travel to Southeast Asia, visiting countries such as Vietnam and Cambodia next week, to shore up trade deals. President Trump said he is expecting a call will soon come from Xi, but the Chinese president it appears will be too busy.
"Based on my calculations, the tariff rate is still quite high, at least as high as anything we have seen since the 1930s," the renowned BCA Research's Chief Economist Peter Berezin told Yahoo Finance on Friday. "There is no guarantee these so-called reciprocal tariffs are going to come down. The fact of the matter is that most countries don't have very large trade barriers with the U.S."
"The uncertainty is a problem, I think we are still headed into a recession, unfortunately," he said.
Adding to the woes for the Trump-induced crisis, Consumer Sentiment fell for the fourth straight month, plunging 11 percent from last month. "This decline was pervasive and unanimous across age, income, education, geographic region, and political affiliation. Sentiment has now lost more than 30 percent since December 2024 amid growing worries about trade war developments that have oscillated over the course of the year,"
"Consumers report multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, incomes, inflation, and labor markets all continued to deteriorate this month. The share of consumers expecting unemployment to rise in the year ahead increased for the fifth consecutive month and is now more than double the November 2024 reading and the highest since 2009," the University of Michigan consumer survey released on Friday said. "This lack of labor market confidence lies in sharp contrast to the past several years, when robust spending was supported primarily by strong labor markets and incomes. Note that interviews for this release were conducted between March 25 and April 8, closing prior to the April 9 tariff partial reversal."
Astonishingly, most Americans now believe inflation in the U.S. in 12 months time will be 6.7 percent.
"Year-ahead inflation expectations surged from 5.0 percent last month to 6.7 percentthis month, the highest reading since 1981 and marking four consecutive months of unusually large increases of 0.5 percentage points or more, " the University of Michigan survey stated. "This month's rise was seen across all three political affiliations. Long-run inflation expectations climbed from 4.1 percent in March to 4.4 percent in April, reflecting a particularly large jump among independents."
Despite the turmoil, volatile conditions and continuous whip-sawing, the major U.S. indices at the end on Friday, managed to finish with gains.
The Standard and Poor's 500 climbed 95.31 points, or 1.81 percent, to close at 5,363.36.
The Dow Jones Industrial Average advanced 619.05 points, or 1.56 percent, ending at 40,212.71.
The tech-heavy Nasdaq Composite led the charge with a 337.14-point increase, or 2.06 percent, finishing at 16,724.46.
The late-day rally was fueled by a combination of strong first-quarter earnings from major banks and a favorable inflation report, which momentarily stabilized markets. Additionally, the 90-day pause on new tariffs for countries other than China provided temporary relief to investors.
Despite the day's gains, market volatility remains a concern, with ongoing trade disputes and rising inflation expectations contributing to investor anxiety.
Global Currencies Rally Against U.S. Dollar in Friday Trading
The U.S. dollar weakened across the board on Friday, with major global currencies posting strong gains amid investor optimism and shifting sentiment in international markets.
The euro rose by 1.31 percent against the U.S. dollar, to 1.1344, as encouraging economic data from the eurozone buoyed confidence in the region's recovery prospects.
The British pound also saw significant upward movement, gaining 0.84 percent to settle at 1.3075.
In the Asia-Pacific region, the Australian dollar climbed 1.12 percent to 0.6292, while the New Zealand dollar advanced by a robust 1.63 percent, reaching 0.5830. Both currencies benefited from a rebound in commodity prices and broader risk-on sentiment.
Meanwhile, the U.S. dollar dropped 0.61 percent against the Japanese yen, ending the day around 143.53, as traders sought safe-haven assets amid ongoing geopolitical uncertainty.
The U.S. dollar also slipped 0.65 percent against the Canadian dollar to 1.3885, driven in part by a modest uptick in crude oil prices supporting the Canadian currency.
Rounding out the declines, the U.S. dollar fell 1.01 percent versus the Swiss franc, falling to 0.8152. The Swiss franc's strength was attributed to a continued preference for lower-risk assets.
Overall, the session marked a clear trend of continued dollar softness, with investors rotating into higher-yielding and commodity-linked currencies ahead of upcoming economic releases.
Global Markets Close Mixed on Friday Amid Regional Divergences
Global stock markets ended Friday with a mixed performance, as regional factors influenced trading across Asia-Pacific and European markets. While some indices rallied on local economic momentum, others were weighed down by profit-taking and broader market uncertainty.
North of the border, Canada's S&P/TSX Composite Index outperformed its U.S. counterparts, rising 572.93 points, or 2.49 percent, to settle at 23,587.80.
UK and Europe: FTSE Rallies While DAX and CAC Decline
In the United Kingdom, the FTSE 100 closed higher, rising by 50.93 points to finish at 7,964.18, marking a gain of 0.64 percent. The advance was driven by strength in energy and financial shares.
On the continent, however, key indices retreated. Germany's DAX dropped by 188.63 points, closing at 20,374.10, a loss of 0.92 percent. France's CAC 40 also fell, down 21.22 points to 7,104.80, a decrease of 0.30 percent.
The regional EURO STOXX 50 index declined 0.66 percent to close at 4,787.23, while the broader Euronext 100 Index shed 3.91 points, finishing at 1,399.87, a dip of 0.28 percent. Belgium's BEL 20 stood out with a notable gain of 43.36 points, closing at 4,028.97, up 1.09 percent on the day.
Asia-Pacific: Gains in China, India, and Taiwan Offset Losses Elsewhere
In Asia, performance was similarly mixed. The Hang Seng Index in Hong Kong added 232.91 points to end at 20,914.69, an increase of 1.13 percent, buoyed by tech and property stocks.
India's S&P BSE SENSEX posted a strong rally, rising 1,310.11 points to close at 75,157.26, up 1.77 percent, supported by robust earnings optimism. Taiwan's TWSE Capitalization Weighted Index surged by 528.74 points, closing at 19,528.77, a gain of 2.78 percent.
However, Japan's Nikkei 225 dropped sharply, losing 1,023.42 points to end at 33,585.58, a decline of 2.96 percent, as investors reacted to profit-taking and currency concerns.
Singapore's STI Index saw a steep fall, declining 65.30 points to 3,512.53, a loss of 1.83 percent. In Australia, the S&P/ASX 200 fell 63.10 points to 7,646.50, down 0.82 percent, while the All Ordinaries slipped 60.20 points to 7,853.70, a decrease of 0.76 percent.
New Zealand's S&P/NZX 50 Index Gross also ended lower, falling 182.30 points to 12,019.13, a decline of 1.49 percent.
South Korea's KOSPI Composite Index eased by 12.34 points to 2,432.72, down 0.50 percent, while Malaysia's FTSE Bursa Malaysia KLCI declined 8.37 points, finishing at 1,454.76, a drop of 0.57 percent.
Indonesia's IDX Composite rose modestly, gaining 8.20 points to 6,262.23, up 0.13 percent.
China's SSE Composite Index added 14.59 points to close at 3,238.23, an increase of 0.45 percent, driven by renewed optimism on stimulus measures.
South Africa's Top 40 USD Net TRI Index finished firmly in positive territory, up 98.46 points to 4,456.71, a gain of 2.26 percent, supported by resource-linked stocks.
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