President Donald Trump’s trade war is causing significant turmoil in the financial markets. Investors are signaling distress, with comparisons being made to the Great Depression era. US stocks under Trump’s administration are showing alarming statistics.
The Dow Jones Industrial Average tumbled 9.1% in the first three weeks of April, marking its worst April performance since 1932. The S&P 500 has plunged 14% during Trump’s second term, the worst performance through April 21 for any president since records began in 1928. Despite a modest rebound on Tuesday with stocks rising over 2%, Trump has a long way to go to avoid historical infamy.
The only presidential term to start nearly as poorly was Franklin Roosevelt’s in 1941, which saw a decline of just over 9%. The US dollar has fallen 5.5% during Trump’s new term, a record dating back to Gerald Ford’s presidency. Treasury bonds, typically a safe haven during market turmoil, have also been sold off sharply.
Yields on the 10-year US Treasury note have surged from below 4% to 4.4% in just a month, an unusually rapid swing. As traders pull money out of American assets, they are investing elsewhere.
Market turmoil sparks investor unease
The MSCI All World index, excluding the United States, has risen 2.9% during Trump’s new term. Concerns about a global recession have led to a dramatic sell-off in oil, which has fallen 19% during Trump’s second term. Conversely, gold has surged, with prices rising above $3,500 an ounce.
Gold has soared nearly 25% during Trump’s new term, breaking the previous record of 13.5% set during Jimmy Carter’s presidency. Trump’s trade war is cited as a key factor in the recent market turmoil. The International Monetary Fund (IMF) has predicted rapidly slowing economic growth, especially in the United States, coupled with a resurgence of inflation.
This potential combination of slow growth and rising inflation is reminiscent of the 1970s stagflation, a challenging economic environment. Goldman Sachs CEO David Solomon commented on the situation, noting that the uncertainty surrounding Trump’s shifting policies has hindered businesses from making necessary adjustments. “The level of uncertainty is too high.
It’s not productive,” he said. “It will have an effect on the growth of the economy, and we will see that, in my opinion, relatively quickly.”
As the global economic system undergoes significant changes, the confusion and unease among consumers, businesses, and traders continue to mount. The full impact of Trump’s trade policies and their long-term effects on the economy remain to be seen.
