European stocks slid further on Friday, building on the significant losses from the previous day. The trend wasn’t isolated to Europe alone; Asian markets also saw declines, and the U.S. markets appeared poised to follow suit, driven by investors flocking towards government bonds as a safe haven in response to Donald Trump’s aggressive tariff moves.
In early trading, the Stoxx Europe 600 index dropped by 1%, following its 2.6% decline on Thursday. Germany’s DAX wasn’t spared, dipping 0.7%.
Turning to Asia, Japan’s Topix took a notable hit, falling 4.5%. Australia’s S&P/ASX 200 index wasn’t far behind, decreasing by 2.2%, while South Korea’s Kospi saw a 1.7% drop.
Oil prices weren’t immune to this trend, with Brent crude slipping 1.8% to $68.86 per barrel.
Trevor Greetham from Royal London Asset Management noted that the tariff situation had shaken investor confidence, dubbing it a “loss of confidence” in U.S. policy decisions. He questioned, “If they’re imposing tariffs on what seems like arbitrary grounds, what other measures might they take?”
This uncertainty led to a drop in government bond yields as investors turned to safer assets, resulting in a decrease in the U.S. 10-year Treasury yield, which fell below 4%. Similarly, 10-year Japanese government bonds saw yields fall by 0.16 percentage points to reach 1.2%.
Looking at futures markets, Wall Street is expected to register more declines today, though not as drastically as Thursday’s steepest drop since 2020.
The S&P 500 index is projected to open 0.5% lower, with the technology-centric Nasdaq 100 index down by 0.3%, according to current indications. All eyes will be on the U.S. non-farm payrolls report, with economists surveyed by Reuters anticipating an addition of 135,000 jobs.
Federal Reserve Chair Jay Powell is also set to deliver a speech later in the U.S. morning.
Traders are now fully anticipating four quarter-point interest rate cuts by the Fed before the year’s end, a shift from the previous expectation of three rate cuts before the tariffs were announced, as implied by swap market levels.
The dollar took a hit, weakening by 0.4%, while the yen gained strength, appreciating 0.3% to ¥145.7, its strongest position since October.
