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IMF warns of ‘significant risk’ to global economy from Trump tariffs as markets slide IMF warns of ‘significant risk’ to global economy from Trump tariffs as markets slide
(31 minutes later)
Fund boss Kristalina Georgieva says it is important that US and trading partners avoid escalating trade warFund boss Kristalina Georgieva says it is important that US and trading partners avoid escalating trade war
The International Monetary Fund has warned that Donald Trump’s implementation of swingeing tariffs poses a “significant risk” to the global economy, as stock markets continue to be hit by a brutal sell-off by investors.The International Monetary Fund has warned that Donald Trump’s implementation of swingeing tariffs poses a “significant risk” to the global economy, as stock markets continue to be hit by a brutal sell-off by investors.
Kristalina Georgieva, the managing director of the IMF, said it was important that the US and its trading partners avoided further escalating the global trade war, while markets in Asia and Australia suffered further declines on Friday.Kristalina Georgieva, the managing director of the IMF, said it was important that the US and its trading partners avoided further escalating the global trade war, while markets in Asia and Australia suffered further declines on Friday.
“We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth,” Georgieva said. “It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty.”“We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth,” Georgieva said. “It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty.”
The US president’s “liberation day” tariff policies, which have resulted in sweeping border taxes of between 10% and 50% imposed on almost every nation, wiped more than $2.5tn (£1.9tn) off Wall Street stocks and share prices in other financial centres across the globe on Thursday.The US president’s “liberation day” tariff policies, which have resulted in sweeping border taxes of between 10% and 50% imposed on almost every nation, wiped more than $2.5tn (£1.9tn) off Wall Street stocks and share prices in other financial centres across the globe on Thursday.
The sell-off continued into Friday, with Asian and European markets falling. Japan’s Nikkei index fell almost 3% on Friday, ending the week down 9%, while Tokyo’s Topix was down 4.5%. South Korea’s Kospi closed down 1.3%.The sell-off continued into Friday, with Asian and European markets falling. Japan’s Nikkei index fell almost 3% on Friday, ending the week down 9%, while Tokyo’s Topix was down 4.5%. South Korea’s Kospi closed down 1.3%.
In London, the FTSE 100 – which fell by 1.5% on Thursday in its worst day since last August – tumbled another 99 points, or 1.17%, to 8,375 points, the lowest since mid-January. Banking stocks were among the heavier fallers, with the Asia-focused Standard Chartered dropping by about 4%.In London, the FTSE 100 – which fell by 1.5% on Thursday in its worst day since last August – tumbled another 99 points, or 1.17%, to 8,375 points, the lowest since mid-January. Banking stocks were among the heavier fallers, with the Asia-focused Standard Chartered dropping by about 4%.
Elsewhere in Europe, the French Cac 40 index was 0.68% lower and the German Dax fell 0.71%.Elsewhere in Europe, the French Cac 40 index was 0.68% lower and the German Dax fell 0.71%.
Australia’s S&P/ASX 200 index fell 2.2% amid fears of a global recession after Trump’s announcement of the steepest trade barriers in more than 100 years.Australia’s S&P/ASX 200 index fell 2.2% amid fears of a global recession after Trump’s announcement of the steepest trade barriers in more than 100 years.
Brent crude, the international benchmark, fell by 3.6% on Friday, down to $67.56 a barrel. That is the lowest level since early December 2021. Brent crude, the international benchmark, fell by 3.8% on Friday, down to $67.48 a barrel. That is the lowest level since early December 2021.
Futures prices indicate that the S&P 500 and the Dow Jones industrial average will drop by 0.7% when trading resumes in New York, while the Nasdaq is expected to open down 0.5%.Futures prices indicate that the S&P 500 and the Dow Jones industrial average will drop by 0.7% when trading resumes in New York, while the Nasdaq is expected to open down 0.5%.
Derren Nathan, the head of equity research at Hargreaves Lansdown, said: “Despite months of sabre-rattling by Donald Trump, markets appear to have been unprepared for the depth and breadth of tariffs announced by the White House.Derren Nathan, the head of equity research at Hargreaves Lansdown, said: “Despite months of sabre-rattling by Donald Trump, markets appear to have been unprepared for the depth and breadth of tariffs announced by the White House.
“The tech-heavy Nasdaq saw the worst of it, falling nearly 6%, but there were hefty drops among the banks, industrials and energy sectors. Traditional defensive havens offered some refuge, with gains seen in consumer staples and utilities.”“The tech-heavy Nasdaq saw the worst of it, falling nearly 6%, but there were hefty drops among the banks, industrials and energy sectors. Traditional defensive havens offered some refuge, with gains seen in consumer staples and utilities.”
Shares in Indian pharmaceutical companies also slumped after Trump said that US tariffs on drugmakers were still under consideration. Shares in Indian pharmaceutical companies also slumped after Trump said that US tariffs on drugmakers were still under consideration. The NSE Nifty Pharma Index fell more than 6% on Friday.
The NSE Nifty Pharma Index fell more than 6% on Friday and is on track for its biggest decline since the onset of the Covid pandemic in March 2020.
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Pharmaceutical companies had experienced a boost on Thursday as the sector was believed to have been exempted from the US import duties. Europe and the US account for 55% of India’s pharmaceutical exports. Pharmaceutical companies had experienced a boost on Thursday as the sector was believed to have been exempted from the US import duties.
In the UK, a Treasury minister said the government was “negotiating intensively” and “at pace” to secure a deal with the US. The government is also consulting on possible retaliatory action.In the UK, a Treasury minister said the government was “negotiating intensively” and “at pace” to secure a deal with the US. The government is also consulting on possible retaliatory action.
The exchequer secretary to the Treasury, James Murray, told Sky News: “The next stage of engagement is to ask [for companies’] input about what possible measures would look like in terms of the UK response because we want to involve businesses in that decision, and we need to be clear that we keep all options on the table … We reserve the right to retaliate but we want a deal, and our full focus is on that.”The exchequer secretary to the Treasury, James Murray, told Sky News: “The next stage of engagement is to ask [for companies’] input about what possible measures would look like in terms of the UK response because we want to involve businesses in that decision, and we need to be clear that we keep all options on the table … We reserve the right to retaliate but we want a deal, and our full focus is on that.”
The Japanese prime minister, Shigeru Ishiba, who has been in post a matter of months and met Trump in February, called the 24% tariff the country now faces on US exports a “national crisis”. Bond prices have jumped across Europe and the US amid fears over global economic growth.
Japan exports $143bn of good to the US annually, nearly 80% higher than imports from the US. UK government bonds – seen as a safe haven asset – increased in value, sending the yield, or effective interest rate, plummeting. The two-year UK government bond yield fell to its lowest level since last September, 0.29 percentage points lower than when US tariffs were announced. The 10-year gilt was 0.1% lower, taking it to the lowest level since February.
Some Asian countries facing some of the steepest tariffs are seeking to negotiate and placate the US. The falls will ease the pressure on the UK chancellor, Rachel Reeves, who cut welfare spending in the spring statement largely to cover an increase in borrowing costs earlier this year.
Prabowo Subianto, the president of Indonesia, has instructed his cabinet to eliminate regulations that hinder trade and enter negotiations with the US. Indonesia, the largest economy in south-east Asia, is facing a 32% tariff rate. Traders also ramped up their bets on UK interest rate cuts. The money markets now expect about 74 basis points of cuts by the Bank of England this year. That shows that three more quarter-point rate cuts are almost fully priced in.
Bangladesh, which has been slapped with a 37% tariff on its goods, is also hoping to hold talks with the Trump administration. A rate cut, from the current level of 4.5%, at the Bank’s next meeting in early May is now an 86% chance, up from about 75% on Thursday.