Oil Prices Plunge 2.8% on Trump Tariff Fears

Oil prices experienced a significant decline in Asian markets following the announcement of President Trump's tariff plan, which has raised concerns about a potential global economic slowdown and a subsequent reduction in oil demand. The near-month West Texas Intermediate crude oil futures fell by 2.8%, settling at $69.70 per barrel, while the near-month Brent crude oil futures also saw a notable drop. This price movement reflects the market's apprehension about the broader economic implications of the tariff plan, which involves imposing reciprocal tariffs on trading partners.

The tariff plan has intensified worries about a global trade war, which could further suppress oil demand. Initially, oil prices rose by $1 during Wednesday's settlement trading but later reversed course, indicating the market's uncertainty and risk aversion. Investors are increasingly turning to safe-haven assets such as defensive stocks, U.S. government bonds, and gold to hedge against portfolio risks. Defensive sectors such as consumer goods, healthcare, and utilities are seen as stable investments in this volatile environment.

The 10-year Treasury yield fell below its 200-day moving average, reaching 4.156%, the lowest level since December of the previous year. This shift towards government bonds indicates a heightened demand for safe assets amid the tariff concerns. Gold has also seen a surge in demand, with international gold prices breaking through $3170 per ounce, reaching a new historical high. The uncertainty surrounding Trump's tariff policies, along with geopolitical tensions, has driven up the price of gold. Additionally, the expectation of rate cuts by the Federal Reserve and strong demand from central banks have contributed to gold's rally.

The tariff plan has led to a shift in market sentiment, with investors seeking to reduce their exposure to riskier assets. The announcement of the tariff plan has caused a significant drop in stock market indices, with the potential for higher tariffs leading to increased consumer prices and lower corporate profit margins, further dampening economic growth. Economists and strategists are closely monitoring the situation, with some predicting that the tariff plan could lead to a period of stagflation, characterized by high inflation and slow economic growth. The potential for a global economic slowdown has led to a more cautious outlook, with some analysts predicting that the S&P 500 index could fall to 5300 points in the next three months.

The tariff plan has also raised concerns about the potential for a global trade war, which could further disrupt supply chains and increase costs for businesses. The uncertainty surrounding the tariff plan has led to a more risk-averse market environment, with investors seeking to protect their portfolios from potential downside risks. The tariff plan has also led to a shift in market sentiment, with investors seeking to reduce their exposure to riskier assets. The announcement of the tariff plan has caused a significant drop in stock market indices, with the potential for higher tariffs leading to increased consumer prices and lower corporate profit margins, further dampening economic growth.