Euro rises to 5-month high after Trump speech. Gold hits historic record!
The euro rose against the US dollar after US President Donald Trump announced retaliatory tariffs on Wednesday night. The EUR/USD pair rose 0.5%, or more than half a US cent, to 1.0915 by 5:17 a.m. ET, nearing a five-month high of 1.0953. The level has almost recovered all of the losses since Trump was re-elected on Nov. 5.
The US president said his administration would impose a minimum tariff of 10% on all countries and additional duties on nations deemed to be violators. He showed a chart listing the countries subject to the highest tariffs, with China, the European Union and Vietnam as the top three, with rates of 34%, 20% and 46% respectively. The additional rate would push import duties on China to 54% on top of the existing overall tariff of 20%.
The US dollar weakened broadly against most other major currencies, particularly the Japanese yen, euro, British pound and Swiss franc, as traders awaited economic reactions to the US, with 10-year US Treasury yields falling to their lowest level since October 2024.
However, commodity currencies, particularly the Australian dollar and the Canadian dollar, weakened against the greenback. These currencies are linked to global commodity prices, such as copper and crude oil, which saw sharp declines in Asian trading on Thursday. The sweeping reciprocal tariffs have stoked fears of a full-blown global trade war, raising concerns of a sharp economic slowdown and even a broader recession, which in turn has dampened the outlook for demand for industrial metals and energy.
Global stock markets fall
The announcement rattled global markets, sending stock markets across Asia lower on Thursday. Japan's stock market led the biggest losses, with its benchmark Nikkei 225 down nearly 3% during the session, followed by China's Hang Seng Index, which slipped 1.5%, while Australia's ASX 200 and South Korea's Kospi both fell 1%.
In particular, large miners' stocks led the big losses on the Australian stock market, with BHP down 2.4% and Rio Tinto down 2.8%. The copper decline weighed heavily on regional markets, with the impact likely to spill over into UK stocks due to the nature of the dual listing.
“While Australia’s direct trade exposure to the US is minimal, knock-on effects via China and wider Asian countries that have seen high tariffs could weigh on our export-heavy economy, particularly if global demand slows and commodity prices retreat, ” Josh Gilbert, a market analyst at eToro, wrote in a note.
U.S. stock futures fell, with the Dow Jones Industrial Average down 2.01%, the S&P 500 down 2.78%, and the Nasdaq down 3.3%, pointing to a lower open on Thursday. Selling is set to boom in European markets today, as Germany's DAX futures were already down 1.89% by 5:30 a.m. Central European time.
Tech stocks are set to fall, as evidenced by the extended trading session on Wall Street. All of the Magnificent Seven stocks fell sharply in after-hours trading, with Tesla shares down 4.5%, Apple down 2.3% and Nvidia down 2.4%. “ It’s clear that there will be a weighting effect on these tech titans, especially given Apple’s heavy exposure to China and Nvidia’s reliance on Taiwan, ” Gilbert added.
Gold rises to a new high
The risk sentiment sent gold prices soaring to a new all-time high, with gold futures jumping to $3,195 an ounce on COMEX and spot gold rising as high as $3,167 an ounce before retreating.
Uncertainties will remain, which could offer further upside potential for the yellow metal. "There was no clear indication that the Trump administration is going to stop here with the 'trade wars.' This could mean further uncertainty," said Kyle Rodda, a senior market analyst at Capital.com.
Gold, seen as a typical safe-haven asset, has risen 20% this year, following a 30% rise in 2024, making it one of the best performers among asset classes. Increased central bank purchases, suspicions of a weakening U.S. dollar and investor hedging have all contributed to the precious metal's price surge in recent years.
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