Markets were jolted overnight as former U.S. President Donald Trump announced a sweeping 10% global tariff, with targeted 34% tariffs on China and 10% on Australia. The dramatic move sent shockwaves across global financial markets, triggering a rally in the Japanese yen, a selloff in stocks, and increasing concerns over potential economic retaliation from major trade partners.

Market Reaction: Yen Surges, Stocks Plunge

The Japanese yen saw a sharp rally, with investors seeking refuge in safe-haven assets. Japanese government bonds surged, while equities took a hit. Particularly hard-hit were Japan’s banking stocks, as the Bank of Japan’s (BoJ) rate hike outlook darkened amid trade tensions.

Adding to the economic strain, Japanese officials labeled Trump’s 24% tariff on Japanese goods as “regrettable” and pushed for an exemption, though the U.S. has yet to respond.

China and EU Vow Retaliation

China was swift in condemning the tariffs, urging the U.S. to immediately lift the trade barriers. The Chinese stock market initially tumbled but pared losses as traders bet on government policy support. The Chinese services sector showed resilient growth, but the broader economy faces renewed pressure.

The European Union also responded with strong language, vowing countermeasures against Trump’s 20% tariffs on European goods. EU leaders are now discussing reciprocal actions, setting the stage for another round of global trade disputes.

Cryptos and Commodities React

The cryptocurrency market did not escape the fallout. Bitcoin and top altcoins slid, reflecting broader risk-off sentiment among investors.

Meanwhile, gold, which recently hit a record high, pulled back as traders shifted focus to the upcoming U.S. non-farm payroll (NFP) data. With Federal Reserve Governor Adriana Kugler signaling support for holding interest rates steady amid persistent inflation risks, investors are closely watching Treasury yields, which have fallen as markets digest the impact of tariffs.

Other Global Developments

Beyond the tariff turmoil, European nations are reportedly considering using NATO assets to establish a peacekeeping force in Ukraine. Meanwhile, pharmaceutical giant Roche faced regulatory scrutiny as the European Medicines Agency (EMA) requested a clinical hold on its Elevidys studies.

In industrial news, Rolls-Royce is in talks with the UK government over potential subsidies to fund new engine development, as it looks to solidify its position in the aerospace industry.

What’s Next?

With trade tensions escalating and retaliation on the horizon, global markets remain on edge. Investors are bracing for further volatility, keeping a close watch on how major economies respond to Trump’s latest tariff maneuver.