European and Asian stock markets showed mixed results on Tuesday, following a sell-off on Wall Street driven by concerns over the potential impact of President Donald Trump’s tariffs.
Futures for the S&P 500 and the Dow Jones Industrial Average were up by 0.3%.
Germany’s DAX index rose 0.6%, closing at 22,764.82, while the CAC 40 in Paris gained 0.7%, ending at 8,102.82. In contrast, the UK’s FTSE 100 saw a slight decline of less than 0.1%, finishing at 8,597.00.
Asian markets saw declines as concerns increased about how the higher tariffs would affect exporters in the region.
Japan’s Nikkei 225 index dropped by 0.6%, closing at 36,793.11, marking its lowest point in six months, though it recovered slightly from a more significant drop earlier in the day.
In China, the Shanghai Composite index gained 0.4%, reaching 3,379.83, after the conclusion of the country’s annual national congress, which introduced measures to support the economy.
Hong Kong’s Hang Seng index remained almost unchanged at 23,782.14.
Australia’s S&P/ASX 200 dropped by 0.9%, closing at 7,890.10, while South Korea’s Kospi fell 1.2%, ending at 2,537.60.
Anderson Alves, a trader at ActivTrades, commented that the heightened concerns about both current and upcoming U.S. tariffs, along with retaliatory actions from trading partners, are continuing to impact the stock market. Additionally, China’s newly implemented tariffs will keep putting pressure on equities.
On Tuesday, Japan revised its economic growth rate for the October-December period to an annualized 2.2%, down from the previously reported 2.8%. The revision was due to weaker consumer spending and an increase in private inventories.
The decline in Asian stock markets mirrored a sell-off on Wall Street on Monday, where investors expressed concerns about the economic pain caused by tariffs and other policies as President Trump seeks to achieve his goals.
The S&P 500 fell 2.7%, closing 9% below its record high set just last month. At one point, the index had dropped 3.6%, heading towards its worst day since 2022, when concerns about inflation and the possibility of a recession had markets on edge, even though a recession ultimately did not materialize.
The Dow Jones dropped 2.1%, and the Nasdaq Composite fell by 4%, marking another challenging day in a volatile period where the S&P 500 has fluctuated more than 1%—either up or down—seven times in the past eight days due to ongoing concerns over President Trump’s tariffs. Investors are increasingly worried that these market swings could either directly harm the economy or create enough uncertainty to cause U.S. businesses and consumers to freeze economic activity.
Signs of economic slowdown have already emerged, with surveys indicating rising pessimism. Additionally, real-time indicators from the Federal Reserve Bank of Atlanta suggest that the U.S. economy might be contracting.
When asked whether he anticipated a recession in 2025, President Trump told Fox News, “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.” He added, “It takes a little time.”
Trump’s primary goal is to bring manufacturing jobs back to the U.S., among other reasons for imposing tariffs. Treasury Secretary Scott Bessent has also stated that the economy might undergo a “detox” period as it reduces reliance on government spending. The White House is attempting to limit federal spending, cut the federal workforce, and increase deportations, all of which could have negative impacts on the job market.
The U.S. job market remains stable for now, with solid hiring continuing, and the economy wrapped up the previous year with a strong performance. However, economists are revising their growth predictions for the year ahead.
The concerns currently affecting Wall Street have hit some of its biggest companies the hardest. Major tech stocks, especially those benefiting from the artificial intelligence boom, have experienced significant drops.
Nvidia saw a 5.1% decline on Monday, bringing its total loss for the year to over 20%. This marks a sharp contrast to the nearly 820% surge the company saw during 2023 and 2024.
Tesla, led by Elon Musk, also saw a steep drop, falling 15.4%, pushing its year-to-date loss to 45%. While the stock initially gained after the election due to expectations that Musk’s close ties with Trump would benefit the electric vehicle company, it has since fallen due to concerns over the company’s brand being closely tied to Musk. There have been protests against government actions affecting the workforce, and Tesla dealerships have also been targeted.
In energy trading, U.S. benchmark crude oil rose by 24 cents to $66.27 per barrel, while Brent crude, the international benchmark, gained 32 cents to reach $69.60 per barrel.
In the currency market, the U.S. dollar strengthened to 147.29 yen from 147.14 yen. The euro also rose to $1.0916, up from $1.0834.