U.S. Stock Futures Plunge Amid 125% Tariff Hike on China

On April 10, U.S. stock index futures experienced a sudden and significant decline. The Nasdaq-100 index futures fell by 2.24%, while the S&P 500 index futures and the Dow Jones Industrial Average futures dropped by 1.81% and 1.35% respectively. This abrupt downturn occurred amidst news that the U.S. had announced a 125% tariff increase on certain Chinese imports. The Chinese Foreign Ministry responded strongly, stating that the U.S. was using tariffs as a tool for extreme pressure and private gain, violating international trade rules and disrupting global economic stability. The Ministry emphasized that China would take necessary countermeasures to protect its sovereignty and the international trade order.

The sudden drop in U.S. stock futures came after a day of global market gains. Asian markets had seen significant increases, with the Nikkei 225 index rising by 9.13% and the Korean stock market up by 4.75%. European markets also opened with substantial gains, with the STOXX50 index rising by 5.93%, the UK's FTSE 100 index by 4.22%, the French CAC40 index by 5.26%, and the German DAX index by 5.41%. This rally was attributed to the temporary suspension of major tariff measures by the U.S. administration, which had previously been a significant source of market volatility.

Analysts have expressed concerns about the potential negative impact of the U.S. tariff policy on the American economy. The chief macroeconomic analyst from a prominent securities firm noted that the Trump administration's tariff policy could drag down the global economy. High tariffs could increase consumer prices, and although the U.S. labor market remains strong, the risk of an economic recession has increased. From a long-term perspective, high tariffs ultimately burden American residents, exacerbating income inequality.

For the U.S. financial market, another securities firm pointed out that after the tariff increase, the pressure on U.S. stock earnings revisions and a second bottom exploration is significant. The road to recovery after the bottom reversal will be bumpy. Currently, U.S. stocks have not priced in a recession on the earnings side. If the recession materializes, there will be another round of earnings drag.

The global market's reaction to the U.S. tariff announcement highlights the interconnected nature of modern financial markets. Despite the initial rally in Asian and European markets, the news of increased U.S. tariffs on Chinese goods led to a swift reversal in sentiment. This underscores the sensitivity of markets to geopolitical risks and the potential for sudden, dramatic shifts in investor confidence. The situation remains fluid, with both sides of the trade dispute continuing to monitor developments closely.