LONDON (Reuters) – A stock market rout, historic in scale, has swept across the globe wiping more than $10 trillion off major markets, as concerns about the economic damage unleashed by U.S. President Donald Trump’s tariffs spiral.
No corner of the world has been left unscathed by selling, with moves of a magnitude last seen during the 2020 COVID-19 crisis.
Here’s how the selloff looks in charts.
WALL STREET MELTDOWN
The S&P 500 stock index fell over 10% in the last two trading sessions of last week, its worst performance since the end of the Second World War and rivaled by the 1987 stock market rout, the 2008 global financial crisis and the 2020 COVID shock. The benchmark whipsawed on Monday, falling as much as 4.8% before bouncing as much as 4%. It was last down 1.33% as of 1700 GMT.
Kevin Thozet, investment committee member at Carmignac, said he expected U.S. stocks to keep falling and the cost of borrowing for companies to keep rising. The hit to U.S. household wealth from the severe stock-market losses would impact consumer spending and economic growth.
U.S. households are heavily invested in equities and their combined wealth hit a record high at the end of 2024 after two years of dazzling stock market gains.
“There’s been a kind of toxic wedding between U.S. economic growth and U.S. equity markets because (cash) savings rates were so low.”
VOLATILITY HIGH
Wall Street’s fear gauge, the VIX index, is now trading at its highest since last August’s selloff in global stocks. The VIX index closed above 45 on Friday for the first time since the 2020 COVID crisis, also the biggest single-day jump since then.
In Europe, a similar indicator — the Euro STOXX Volatility Index — was set for its biggest one-day surge in absolute terms since October 2008.
BANKS
Banking stocks globally have borne the brunt of the selling – with European and Japanese banking stocks having shed roughly 20% each over the last three trading sessions. In Europe, banking stocks – that had been riding high on optimism about brighter longer-term growth prospects following news last month of Germany’s huge fiscal boost – have lost 15% in three days, their largest such drop since COVID.
Recession fears are boosting expectations for faster interest rate cuts from big central banks — a backdrop that typically bodes ill for banks.
CRUDE DECLINE
Another area that is feeling the pain of the coming weakening in demand from a global growth hit is oil. Brent crude was last down 2%, having hit its lowest since April 2021. Over three sessions, oil has lost almost 15% — the biggest three-day drop since the COVID crisis.
DOWN, DOWN UNDER
The Australian dollar has been a major casualty. Australian exports to the United States will be subject to the lighter 10% rate, compared with China’s hefty 34%, based on the list Trump unveiled last week.
But traders often use the Aussie dollar as a proxy for the less-liquid Chinese yuan, given Australia’s exposure to the Chinese economy. Since Trump unveiled his tariffs and China’s tit-for-tat response, the Aussie has lost nearly 4% in value.
It has dropped 4.5% in the last two days alone, marking its largest two-day fall since a 6% drop in 2020, in turn, the largest since 2010.
DONG TAKES A HIT
Markets in Vietnam, one of the major engines of “Factory Asia” and a huge exporter of goods to the United States – are reeling. Trump has slapped a duty of 46% on imports from Vietnam. Its trade surplus with the United States rose by an annual 20% in 2024 to a record above $123 billion, exporting anything from coffee to sporting apparel. Domestic stocks and the dong currency have dropped accordingly.
The dong has hit an all-time low and is around 5% below last September’s seven-month peak.
A weak currency does have the effect of making Vietnam’s exports even cheaper than they otherwise would have been. Yet it may not be enough to offset the damage of hefty U.S. tariffs.
NEW FRONTIER
The sovereign bonds of several so-called frontier markets have suffered selling. Bonds issued by Pakistan, which exports textiles to the United States, dropped 13 cents before retracing, pushing some of its debt to or below 70 cents on the dollar, a level below which a borrower is considered to be distressed.
Sri Lanka’s recently restructured bonds also faced steep losses as the exporter is hit by tariffs, as did oil exporters such as Angola. The hammering poses serious questions for the borrowing costs and economic outlook of some of the countries; Sri Lanka had been clawing its way back from the worst economic crisis in a generation, and Pakistan and Angola have struggled with high debt burdens in recent years.
(Reporting by Dhara Ranasinghe, Amanda Cooper; Libby George, Naomi Rovnick, Samuel Indyk and Danilo Masoni; Editing by Sharon Singleton)
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