Market turbulence is intensifying as geopolitical tensions and economic uncertainty reshape the investment landscape. A deepening rift between the US and its allies over tariffs and Ukraine has sent shockwaves through global markets, prompting investors to reassess their positions. Last week saw the most dramatic moves yet, with technology stocks, particularly the “Magnificent Seven,” bearing the brunt. The Nasdaq Composite Index tumbled 4.9%, erasing its year-to-date gains and reigniting concerns over sector stability.
The pressure on tech has been mounting since January when China’s DeepSeek AI chatbot challenged US dominance in artificial intelligence. Nvidia, the semiconductor giant powering AI’s infrastructure, has been at the forefront of this sectoral shift. Earlier this year, the company soared to become the world’s most valuable, reaching a staggering $3.6 trillion market capitalisation. However, all eyes were on Nvidia’s latest earnings report, which, despite exceeding sales expectations at $39.3 billion, failed to impress investors wary of slowing momentum. The company’s warning of tightening gross margins triggered an 8% decline in its share price, shaving its market value down to $2.8 trillion.
While tech investors have faced heightened volatility, the cryptocurrency market has endured an even greater upheaval. The sector suffered a brutal selloff following a $1.5 billion cyber heist at exchange firm Bybit and the collapse of Libra, a memecoin backed by Argentine president Javier Milei. Libra’s meteoric rise to $4.4 billion in value was undone by a 95% plunge, exacerbating jitters in the space. Temporary relief came when President Trump signed an executive order supporting digital assets, instructing a working group to establish a Crypto Strategic Reserve. Bitcoin surged to $95,000 in response but has since retracted to $85,000—still well below its record highs.
Geopolitical tensions remain front and centre, with Europe reacting swiftly to a dramatic Oval Office confrontation between President Trump, JD Vance, and Ukrainian President Volodymyr Zelensky. In a show of defiance, UK and French leaders led calls for increased military aid to Ukraine, a move that sent defence stocks soaring. Shares in Germany’s Rheinmetall spiked 16%, extending year-to-date gains to 86%, while BAE Systems and Thales saw 15% and 16% jumps, respectively.
Despite a strong start to the week, market optimism was short-lived as Trump unveiled his most aggressive trade measures yet. Effective immediately, the US imposed 25% tariffs on imports from Canada and Mexico, alongside an additional 10% levy on Chinese goods. The President cited insufficient action on fentanyl trafficking as the justification, demanding stricter border controls. Retaliation was swift—China countered with 10-15% tariffs on key US agricultural imports and blacklisted major US firms in aviation, defence, and technology. Canada followed suit, slapping 25% tariffs on $107 billion worth of American goods.
Commodity markets also reacted sharply, with Brent Crude plummeting to $71 a barrel, marking its lowest level in six months. The drop reflects fears that escalating trade conflicts will dampen demand, just as OPEC+ prepares to increase production by 138,000 barrels per day—its first output hike since 2022.
Looking ahead, investors will closely monitor the European Central Bank’s policy meeting this Thursday, where a 0.25% rate cut to 2.5% is widely expected. With inflation moderating to 2.4% in February, the ECB appears on track to meet its 2% target, offering potential relief amid the broader economic uncertainty.
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