The Hindu: Published on 8th April 2025:
Why in News?
Global stock markets, including India’s Sensex and Nifty, witnessed sharp declines amid renewed trade tensions between the U.S. and China. U.S. President Donald Trump’s threat to impose additional tariffs of 50% on Chinese goods and China’s retaliatory stance triggered panic among investors, raising fears of a global recession.
What Happened:
Indian markets opened over 5% down and closed with a 3% loss.
Sensex fell by 2,227 points to close at 73,138.
Nifty dropped by 743 points, ending at 22,162.
Small and mid-cap stocks suffered more than bluechip companies.
Major losers: Tata Steel, L&T, Tata Motors, Kotak Mahindra Bank, Infosys.
Jaguar Land Rover (JLR) halted exports to the U.S., impacting Tata Motors.
Cause of the Crash:
U.S.-China trade war tensions flared up again.
Trump’s warning of 50% additional tariffs on Chinese imports.
China's retaliatory tariff plans.
Global fears of a looming recession.
Uncertainty over future negotiations.
Key Statement from Trump:
"If China does not withdraw its 34% increase... the U.S. will impose additional tariffs of 50%, effective April 9," — Truth Social
This threat triggered a global market sell-off.
Global Market Impact:
Japan’s Nikkei 225 dropped 8.8% intraday, closed 7.8% lower.
South Korea’s KOSPI fell 5.57%, hitting a 17-month low.
Hong Kong’s Hang Seng Index crashed 13.22%, worst since 1997.
China’s Shanghai Composite fell 7.34%, worst day in 5 years.
U.S. Markets (early hours):
NASDAQ down 1.99%
Dow Jones down 2.70%
S&P 500 down 0.31%
Market Controls Triggered:
Circuit breakers were triggered in South Korea and Japan to stop panic selling in futures markets.
Indian Market Perspective:
According to Devarsh Vakil (HDFC Securities):
"Nifty’s 5% gap-down opening is the worst since the COVID-19 crash in March 2020."
The high volatility was due to sharp global sell-offs and investor panic.
Impact & Implications:
Investor sentiment weakened globally.
Uncertainty over U.S.-China relations may continue to pressure markets.
Export-driven sectors, especially auto and metal, are vulnerable.
Possibility of a global slowdown if trade war escalates.
Broader Geopolitical Context:
Tensions between the two largest economies threaten global supply chains.
This could lead to inflationary pressures and currency fluctuations.
May force central banks to reassess their monetary policies.