Global financial markets experienced extreme turmoil in the past days, following the implementation of broad US tariffs and swift international retaliation.
This aggressive trade policy sparked a dramatic sell-off across global equities, erasing trillions in market value over just a few sessions and marking the worst downturn for many indices since the March 2020 pandemic, before the recent rebound.
Volatility surged, with the Cboe Volatility Index (VIX) or fear gauge soaring to very high levels, reflecting deep investor anxiety.
Technology and financial stocks were particularly hard-hit amid the broad sell-off. Commodity markets faced intense pressure; crude oil prices plunged over fears the trade war would trigger a global recession and slash demand. Gold saw volatility but held up relatively better, benefiting from safe-haven demand amid the chaos.
Government bond markets reacted with volatility. US Treasury yields initially fell in a flight to safety but then rose sharply. The market reacted to the concerns about inflation and speculation of foreign holders dumping US government securities. This unusual dynamic, coupled with the equity rout, fueled stagflation fears.
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