Markets across the world took a massive tumble as trade war tensions flared up again on Monday, March 3, 2025. The US government has declared a 25% tariff on imports from Canada and Mexico, along with an extra 10% tariff on Chinese goods, effective from Tuesday. This sent shockwaves through global markets, triggering a major sell-off.
The US markets slumped by up to 2.5%, while Asian indices opened over 2% lower on Tuesday. Crude oil prices slid to a six-month low, and the US 10-year bond yield dipped below 4.7%, reflecting growing fears about economic stability. To make matters worse, the Federal Reserve Bank of Atlanta slashed its GDP growth forecast further to -2.8% from 1.5% just last week. With uncertainty rising, gold prices spiked as investors rushed towards safer options.
GIFT NIFTY futures signal a rough start for Indian markets
GIFT NIFTY futures were down by 160 points, trading at 22,096 points on Tuesday, hinting at a weak opening. Foreign Institutional Investors (FIIs) continued to dump Indian stocks, selling off equities worth ₹4,788 crores on Monday. However, Domestic Institutional Investors (DIIs) tried to balance things out by investing more than ₹8,700 crores in stocks.
US markets bleed as tech stocks sink
It was a tough day on Wall Street, with major indices closing deep in the red. The NASDAQ fell by 2.6%, led by steep losses in tech giants like Nvidia Corporation, Broadcom Corporation, and Amazon, which dropped as much as 8%. The ISM report showed US manufacturing took a sharp hit, with new orders plunging to their worst level since March 2022. Inflation worries also picked up pace, making things even more uncertain. Investors are now treading cautiously as they decide when to invest in stocks.
Asian markets follow the slump
The ripple effect from the US crash was felt across Asian markets as well. Japan's Nikkei tumbled over 840 points, while Hong Kong's Hang Seng Bank Limited shed 1.4%. The fear now is that China might retaliate with tariffs of its own, escalating the trade war and deepening market worries.
Crude Oil Prices dip amid demand and supply shocks
Crude oil prices dropped over 2% as concerns over demand piled up. The OPEC+ group's decision to roll back its 2.2 million barrel per day production cut added to the pressure. West Texas Intermediate (WTI) crude slipped below $68 per barrel, while UK crude dropped under $72 per barrel.
FII and DII activity in Indian markets
Foreign investors are still wary of Indian stocks, continuing their selling spree from February when they pulled out nearly ₹47,000 crores from equities. On Monday, they maintained a bearish stance, holding 1.87 lakh short contracts in the derivatives market. Meanwhile, DIIs continued to invest in stocks, offering some cushion to Indian markets.
With uncertainty looming large, investors should stay cautious and keep a close eye on how the trade war situation unfolds before making big investment moves.
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