Global stocks showed caution on Thursday, with Asian shares under pressure due to U.S. President Donald Trump’s tariff plans, geopolitical concerns, and a cautious stance from Federal Reserve policymakers.
These factors negatively impacted risk sentiment. The risk-off atmosphere pushed gold prices to a record high, while the safe-haven Japanese yen strengthened to its highest level since early December against the dollar.
European futures indicated a muted opening on Thursday, following a nearly 1% drop in the pan-European STOXX 600 index the previous day, marking its largest daily decline in two months. Futures for the S&P 500 and Nasdaq eased by 0.3%.
Throughout the week, Trump has pledged tariffs on a wide range of imports, including pharmaceuticals, semiconductor chips, and lumber. He plans to impose tariffs on autos by April 2.
These actions, along with other threats, have heightened fears of a broad trade war, leaving investors anxious. However, some analysts view Trump’s moves as negotiation tactics.
Market jitters intensified due to geopolitical concerns after Trump alarmed European officials by calling Ukrainian President Volodymyr Zelenskiy a “dictator” amid U.S. discussions with Russia to end the Ukraine war.
The yen reached an over two-month high against the dollar, rising 0.9% to 150.065 per dollar. The yen has gained more than 4% against the dollar this year, bolstered by increasing expectations that the Bank of Japan will raise rates again in 2025.
“Uncertainty about the Fed’s policy and Trump’s tariffs will continue to rattle markets and keep investors on edge, with no end in sight in the short term,” said Vasu Menon, managing director of investment strategy at OCBC Bank in Singapore.
“Investors must come to terms with the fact that volatility will be more elevated this year… There are valid reasons to remain sanguine about the investment outlook, especially for those with the risk appetite and patience.”
In Asia, Japan’s Nikkei index slid 1.5% due to the strong yen. Meanwhile, a significant rally in Chinese technology shares took a breather.
Hong Kong’s Hang Seng Index slipped 1.3%, having reached a four-month high earlier this week, driven by tech stocks following Chinese startup DeepSeek’s breakthrough.
Trump’s initial policy proposals raised concerns at the Fed about rising inflation. Firms informed the U.S. central bank that they generally expected to increase prices to offset the costs of import tariffs, according to the Fed’s January meeting minutes released on Wednesday.
“Trump’s policies… no doubt added complexity to the Fed’s balancing act between inflation and employment, forcing policymakers to lean into a wait-and-see approach,” said Yeap Jun Rong, market strategist at IG.
“That said, with market expectations already well aligned for a rate hold over the next two FOMC meetings, the minutes served more as confirmation of existing sentiment.”
Traders are anticipating 39 basis points of cuts from the Fed this year, with the next move fully priced in for September, according to LSEG data.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, eased by 0.16% to 107.06. The euro remained steady at $1.0428.
Gold prices reached a fresh record high of $2,947.11 an ounce, marking a new peak for the tenth time this year. The yellow metal has risen 12% so far in 2025, following a 27% increase last year, which was its strongest annual performance in over a decade.
Oil prices retreated from a one-week high, while wheat prices extended gains for a fifth session, trading near their highest close since October due to concerns that cold weather in Russia and the U.S. could damage crops.
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