LONDON (Reuters) – Global markets have been pummeled yet again on Wednesday as President Donald Trump’s eye-popping 104% tariffs on China took effect and a savage selloff in U.S. bonds sparked fears that foreign funds were fleeing U.S. assets.
Here is an overview of all the market news you need to start your day. Mike is off today, but check out his latest column to find out why the yuan is making analysts across Wall Street rip up their recently revised dollar forecasts.
Today’s Market Minute
* China’s top leaders plan to convene a meeting as early as Wednesday to discuss measures to boost the economy and stabilise capital markets, people with knowledge of the matter said.
* U.S. Treasuries extended heavy losses on Wednesday in a sign investors are dumping even their safest assets as a global market rout unleashed by U.S. tariffs takes an unnerving turn towards forced selling and a dash for the safety of cash.
* Taiwan Semiconductor Manufacturing could face a penalty of $1 billion or more to settle a U.S. export control investigation over a chip it made that ended up inside a Huawei AI processor, according to two people familiar with the matter.
* China’s central bank has asked major state-owned banks to reduce U.S. dollar purchases, people with direct knowledge of the matter said on Wednesday.
* French industry minister Marc Ferracci on Wednesday urged French companies to suspend their investments in the United States, given clashes between France and Europe with U.S. President Donald Trump’s administration over tariffs.
It’s a ‘bond story’ now
This week has brought crisis-era volatility to markets, erasing trillions of dollars in value from stocks and hitting commodities and emerging markets with force.
At the epicentre of the latest rout are U.S. Treasuries, effectively the backbone of the global financial system. The benchmark U.S. 10-year yield rose by as much as 26 basis points to a high of 4.515% in Asia, before the selloff abated, leaving it up 7.7 bps at 4.34%.
“Last week was an equity story but as ever, it’s moved from an equity story to the more important bond story,” Chris Beauchamp, chief strategist at IG, said. “This is the financial plumbing and clearly, the plumbing has begun to seize up.”
Potentially adding to the pressure on Treasuries is an auction of new 10-year notes later on today that could prove a crucial litmus test of investor appetite for U.S. government debt.
Meanwhile, the yield on the 30-year Treasury briefly spiked above 5% before dropping back below 4.9%.
Not to be outdone, British 30-year government bond yields surged to their highest since 1998 on Wednesday. The dollar – which is typically the ultimate safe-haven – fell broadly, as investors dashed into the likes of gold and the Swiss franc, accelerating the flight from stocks and industrial commodities.
Overnight, Washington confirmed 104% duties on imports from China would take effect at 12:01 a.m. Eastern Time, as planned. That deadline passed with no new developments on trade.
China’s onshore yuan finished its domestic session on Wednesday at 7.3498 per dollar, the weakest close since December 2007.
U.S. stock futures were anchored in negative territory early on Wednesday. The S&P 500 has lost $5.8 trillion in stock market value, the deepest four-day loss since it was created in the 1950s.
In Europe, the STOXX 600 fell nearly 3% in early trading, bringing the loss in market capitalisation since April 1 – the day before Trump’s ‘Liberation Day’ – to roughly $1.4 trillion.
Chart of the day
While President Trump continues to assure Americans that his tariff “medicine” will ultimately be worth it, the U.S. public seems less than convinced. The latest Reuters/IPSOS opinion poll conducted after the sweeping global import tariffs were announced last week shows almost 60% are opposed to the moves, with one-in-four self-identified Republican voters against the tariffs. Trump seems determined to plow ahead despite the anxiety. But if a much-feared economic downturn ensues as a result of these moves, Americans may increasingly conclude that the “cure” is worse than the “disease”.
Today’s events to watch
* Mexico March inflation
* Federal Open Market Committee minutes from March meeting
* Richmond Federal Reserve President Thomas Barkin speaks; European Central Bank board member Piero Cipollone and Dutch central banker Klaas Knot speak; Bank of England Deputy Governor Clare Lombardelli speaks
* WTO meets in Geneva
* U.S. corporate earnings: Delta Airlines, Constellation Brands
* U.S. Treasury sells $39 billion of 10-year notes
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Anna Szymanski; editing by Philippa Fletcher)
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