Global Markets Weaken as U.S. Implements Tariffs

By Michael SusinThe dollar and bond yields fell along with major stock markets in Asia and Europe as President Trump's tariffs came into effect, lighting up a trade war that has investors concerned about global growth. Oil prices also continued to slide.The Dow Jones Industrial Average dropped nearly 650 points on Monday as Trump confirmed he would impose a 25% levy on Canadian and Mexican goods, while tit-for tat tariffs between China and the U.S. also came into effect.At the start of trading in Europe, U.S. stock futures nudged up around 0.1% even as major stock markets declined at the open; the DAX was off 1.6%, the CAC fell 1.2% and the FTSE 100 fell 0.5%. Defense stocks continued to significantly outperform, with Thales up 11% after its results and as investors digested Trump's overnight move to suspend military aid to Ukraine. BAE rose 1.8%, Rheinmetall was up 1.7%, and Leonardo gained 2.4%Meanwhile, the dollar fell with focus moving toward the negative implications for growth and boosting Federal Reserve rate-cut expectations; the DXY dollar index was down 0.2%.Elsewhere, bitcoin fell 2.5% to $83,210, according to LSEG, amid risk-off sentiment. It follows Monday's sharp advances after Trump announced the creation of a strategic crypto reserve.Investors are waiting for key economic data from the U.S. this week, including the Fed's Beige Book on Wednesday, initial unemployment claims Thursday, and the Bureau of Labor Statistics' jobs report and unemployment rate for February on Friday.Oil prices extended losses after news that the Organization of the Petroleum Exporting Countries and its allies--together known as OPEC+--will start raising output in April and as U.S. tariffs took effect, raising fears of a trade war that could hurt the global economy and crude demand. Brent was 1.3% lower at $70.68 a barrel.Gold futures were up 0.75% at $2,922 a troy ounce on safe-haven demand. Base metals have fallen after the U.S. enforced its tariff program, with LME three-month copper and LME three-month aluminum both down 0.35% at $9,366 a metric ton and $2,604.50 a ton, respectively.Bond yields also fell; the 10-year Treasury yield was down 1.2 basis points at 4.168% and the two-year Treasury yield fell four basis points. U.K. gilt yields and the bund yield also fell. The yield spread between U.S. Treasurys and the rest of the world tightened on Monday to hit five-month lows.In Asia, the trade war nudged investors toward safe-haven assets such as Australian government bonds and Japan's yen. Hong Kong's Hang Seng Index closed 0.3% lower at 22941.77, weighed by auto stocks as BYD fell 6.8% after announcing a share-placement plan.Dow Jones Newswires staff contributed to this article.Write to Michael Susin at [email protected]