Stocks slump as US tariffs hit tech hardest

The high-flying tech sector was pummelled as manufacturing hubs in China and Taiwan faced new tariffs above 30%, bringing the total new levy to an eye-watering 54% on imports from China.

"The US effective tariff rate on all imports looks to be the highest level in over a century," said Citi's global rates trading strategist, Ben Wiltshire.

Nasdaq futures tumbled 4%, and in after-hours trade, some $760 billion was wiped from the market value of Magnificent Seven technology leaders. Apple shares, hit hardest as the company makes iPhones in China, were down nearly 7%.

S&P 500 futures fell 3.3%, FTSE futures fell 1.8%, while European futures fell nearly 2%.

Gold hit a record high above $3,160 an ounce, and oil, a proxy for global growth, slumped more than 3% to put benchmark Brent futures at $72.56 a barrel.

In early trade in Tokyo, the Nikkei was down 3.9% at an eight-month low, with nearly every index member falling as shippers, banks, insurers, and exporters copped a beating.

Benchmark 10-year Treasury yields shot down 14 basis points to a five-month low of 4.04% as investors braced for slower US growth, while interest rate futures priced in a higher chance of interest rate cuts in the months ahead.

"The tariffs are so comprehensive and so much larger than we expected," said Jeanette Gerratty, chief economist at wealth advisory Robertson Stephens in the US tech heartland of Menlo Park, California.

ahead of President Trump's tariff announcements,

"People were talking earlier about whether clarity would boost the market. But now you have clarity, and no one likes what they see."

RISK TO GLOBAL TRADE

Trump announced a baseline 10% tariff on imports with far higher levies on some trading partners, particularly in Asia.

Besides China's 34% tax, Japan got a 24% tariff, Vietnam 46%, and South Korea 25%. The European Union was hit with a 20% levy.

South Korea's Kospi fell 2%. Van Eck's Vietnam ETF fell more than 8% in after-hours trade. Australian shares fell 2%.

The markets in Taiwan were closed for a holiday.

China's yuan touched a two-month low in offshore trade, ahead of the onshore opening. Ten-year Japanese government bond futures made their sharpest jump in eight months.

"The tariffs announced today lead to significant risk to global trade," said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.

"Supply chains in East Asia face pressure in particular."

The US dollar was higher against Asian currencies in rollercoaster currency trade, except against the safe-haven yen, which rose to the strong side of 148 yen per dollar. 

Trump also shut a loophole used to ship low-value packages from China, which is likely to hurt China's giant online retailers.

Trading partners are expected to respond with countermeasures of their own that could lead to dramatically higher prices.

"The tariff rates unveiled this morning far exceed baseline expectations, and if they aren't negotiated down promptly, expectations for a recession in the US will rise dramatically," IG market analyst Tony Sycamore said.

Reuters