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Shares took a nosedive overnight in some of the world’s biggest companies overnight, following Donald Trump’s confirmation that trade tariffs of 25 per cent would come into effect for Mexico and Canada, along with an additional 10 per cent - now totalling 20 per cent - on China.
That means an immediate price retracement for many businesses trading on the Nasdaq, New York Stock Exchange and other markets, including Asia overnight.
The biggest fallers and most-affected companies initially looked to be those who of course operate in those countries for manufacturing or services, with car makers and chipmakers particularly hit.
Nvidia (NVDA), formerly the world’s biggest company by market capitalisation, dropped in excess of 8.6 per cent on Monday, with a further pre-market fall of 2.2 per cent showing by 1pm GMT.
Super Micro Computer Inc (SMCI) - already volatile on internal and auditing issues this year - suffered a 13 per cent initial drop and is slated to open six per cent lower again on Tuesday, while Dell (DELL) fell seven per cent and 1.3 more ahead of opening.
The immediate reach of Trump’s words went beyond them, however, with Canadian e-commerce giant Shopify (SHOP) falling 4.8 per cent and electric carmakers Li (LI) and BYD (1211.HK) dropped 10.9 and 9.2 per cent respectively - with the fallout continuing as European markets opened on Tuesday.
Volkswagen (VOW3.DE) (3.5 per cent) was one of the European stocks affected as such, while London Stock Exchange-listed Diageo (DGE.L) - a drinks and spirits maker with a significant tequila business based in Mexico - also suffered a hit down 1.5 per cent early on before rebounding two-thirds of the way by 1pm.
The wider UK market sunk by around 0.5 per cent after opening Tuesday morning, with Germany’s Dax (^GDAXI) down 1.7 per cent and France’s Cac 40 (^FCHI) down one per cent.
“Donald Trump forged a reputation for being Mr Unpredictable during his first term as US president. This time he’s on a mission to do something dramatic on a daily basis and markets continue to be taken aback by the pace and ferocity of his decisions,” Russ Mould, investment director at AJ Bell, said.
Mr Mould further noted that Trump’s decision to halt aid to Ukraine would also have contributed to wider fears on holding risky assets, but suggested “the extent of the market sell-off wasn’t as bad as it could have been under the circumstances” as several London-listed companies rose.
“Canada now expects to retaliate with equivalent tariffs on a range of goods including food, with a plan to ramp this up after a 21-day consultation period. This comes alongside an additional 10% tariff on China,” Lindsay James, investment strategist at Quilter Investors said, while adding there was “no clear route to de-escalation.”