The sell-off in risk assets intensified as tariffs took effect

The US economy added 228,000 jobs in March 2025, well above the downwardly revised 117,000 in February and above expectations of 135,000. This is the highest rate in the last three months. Despite the positive Non-Farm Payrolls report, all investors’ attention was focused on escalating trade tensions. At the end of Friday, the Dow Jones Index (US30) fell by 5.50% (-7.41% for the week). The S&P 500 Index (US500) was down 5.97% (-8.21% for the week). The Nasdaq Technology Index (US100) fell by 6.07% (-8.43% for the week). The decline in US markets intensified on Friday as China retaliated against President Donald Trump’s imposition of 10% import duties, adding to fears of a prolonged trade war. The S&P 500 Index fell nearly 9% for the week, the worst weekly drop since 2020, and global markets also fell hard. Trump’s tariffs, which will be expanded on April 9, are expected to reduce global trade, and some analysts have warned of recession risk. Over the weekend, President Trump continued to defend his tariff strategy, signaling on Truth Social that he is not worried about market turmoil. He argued that foreign investors are flocking to the US and insisted that his policies “will never change.”

Trump extended the deadline for ByteDance to sell its US operations to TikTok by 75 days, pushing it back to mid-June. The president said more time was needed to finalize approvals, but emphasized that national security issues remain. ByteDance has confirmed it is in talks with the US government, while Amazon.com Inc (AMZN), Oracle Corporation (ORCL), and Applovin Corp (APP) have expressed interest in acquiring the app’s US assets. Any updates on this front could add another layer of volatility to a market already plagued by geopolitical uncertainty.

The Canadian dollar (CAD) weakened to $1.42 amid signs of a fragile domestic economy and growing foreign trade uncertainty. Domestically, a loss of 32,600 jobs in March and a rise in unemployment to 6.7% indicate a weakening labor market, dampening the economic outlook. At the same time, crude oil prices — a key support for the commodity-linked Lonnie — fell more than 7%. With the Bank of Canada due to review its policy on April 16, expectations of a continued dovish stance amid recession fears intensified.

The Mexican peso (MXN) weakened to 20.5 per US dollar, nearing a three-year low of 20.85, which has been tested repeatedly since early 2025, as escalating global trade tensions and persistent domestic inflationary pressures reduce its appeal. At the same time, lingering uncertainty over Mexico’s potential exposure to US auto tariffs continues to cloud the outlook. Domestically, inflation remains uncomfortably high, complicating Banxico’s policy trajectory as it balances the need to maintain an attractive interest rate differential with the growing need to support slowing economic activity.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 4.95% (for the week -7.24%), France’s CAC 40 (FR 40) fell by 4.26% (for the week -7.32%), Spain’s IBEX 35 (ES35) lost 5.83% (for the week -6.08%), and the UK’s FTSE 100 (UK100) closed down 4.95% (for the week -6.97%). European stocks fell on Friday as investors recovered from new US tariffs and growing recession fears. Banks led the losses, plunged 8.5% after falling 5.5% on Thursday, amid concerns about slowing growth. EU officials said Friday that talks with the US were “frank” but warned that the bloc was “ready to defend interests” if necessary.

WTI crude prices fell 7.4% to $62 a barrel — the lowest level since August 2021 — after falling 6.6% the previous day amid growing concerns about a slowing global economy and weakening oil demand. Investor sentiment is increasingly weakened by an escalating trade war, especially with China’s impending imposition of 34% tariffs on US goods. Recession risks and uncertainty over global trade are adding to worries.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) was down 7.30% for the week, China’s FTSE China A50 (CHA50) lost 1.02%, Hong Kong’s Hang Seng (HK50) decreased by 3.48%, and Australia’s ASX 200 (AU200) was negative 3.94%. Shares in Hong Kong fell by 9.4% in early trading on Monday, marking a second session of sharp losses and hitting a two-month low. The collapse reflected widespread panic across all sectors as investors fled risky assets amid an escalating global trade war and rising recession fears.

Nominal wages in Japan rose by 3.1% year-on-year in February 2025, up from a downwardly revised 1.8% increase in January, in line with market expectations. While strong nominal wage growth has supported the BoJ’s recent move towards policy normalization, rising global uncertainty clouds the outlook for further interest rate hikes.

Vietnam’s annual inflation rate accelerated to 3.13% in March 2025 from February’s three-month low of 2.91%. The increase was driven by higher inflation in food and beverage services (3.83% vs. 3.31% in February).