U.S. Tariffs Triggers Steepest Weekly Stock Decline in Five Years

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Apr 4, stocks fell sharply in response to the Trump’s announcement of a broad range of harsher-than-expected tariffs, which fueled concerns around the potential for slowing economic growth, resurgent inflation, and a possible recession. Small-cap stocks lagged as the Russell 2000 Index(RUT) lost about 10% and ended the week down over 25% from its all-time high, while the S&P 500 Index posted its worst weekly performance in over five years, was down 17.5% from its peak. The tariff announcement led to the largest one-day decline for some indexes since 2020 on Thursday, and stocks continued to slide through Friday. Refer to below major indexes performance table for the week and monthly performance for March.

Major indexes monthly performance for March:

Key highlights for the week and next:

1.    On April 2, President Donald Trump announced U.S. reciprocal tariff plans that were more aggressive than expected. A 10% minimum tariff will apply to all imports coming into the U.S. beginning April 5 while higher tariffs will be charged on countries that the U.S. has larger trade deficits with. The new tariffs are estimated to raise the effective tariff rate on U.S. imports from 2.3% in 2024 to between 20% - 25%, the highest in at least 100 years. 

2.    On April 4, China announced retaliatory tariffs, matching the U.S. reciprocal tariff rate of 34%. 

3.    The tariff announcement, and China's retaliation, drove risk-off sentiment in markets, with equities finishing the week sharply lower and U.S. Treasury yields declining to their lowest since October 2024. 

4.    From 2000 - 2024, the average U.S. tariff rate for all imports was a modest 1.7%. Based on the announced tariffs, the average U.S. tariff rate is expected to jump to between 20% – 25%. In 2024, the U.S. economy imported roughly $3.3 trillion of goods. Assuming an average tariff rate of 20%, this would equate to tariff revenue of roughly $660 billion, or roughly 2.3% of 2024 GDP. 

5.    Uncertainty likely to remain on coming weeks, as it remains uncertain as to how the impacted countries will respond. Some may take a similar approach to China, retaliating with levies on U.S. exports, while others may seek negotiations to lower tariff rates over time. It’s expected this process to play out in the weeks and months ahead, likely keeping market volatility elevated in the near term. 

6.    Nasdaq Composite Index(COMP) and Russell 2000 Index(RUT) officially entering bear markets this week. Declined 22.9% and 25.6% from their peak. While Dow Jones Industry Averages (DJI) and S&P 500 index(SPX) dropped 15% and 17.5% from their peak respectively, also in deep correction territory. 

7.    Job growth surges in March. The closely watched nonfarm payrolls report on Friday showed that the U.S. employers added 228k jobs in March, a sharp increase from February’s downwardly revised reading of 117k and well ahead of estimates for 130k. The unemployment rate ticked up to 4.2% However, the upbeat report did little to improve sentiment during the week as investors remained focused on the potential impacts of new tariff policies moving forward. 

8.    Expectations for the number of Federal Reserve interest rate cuts in 2025 jumped following the announcement, as investors wagered that negative growth effects from the new policies will force the Fed to ease monetary policy to support the labor market and spur economic growth. 

SPX sectors in play

All the 11 SPX sectors recorded weekly losses from down 2.4% to 14.8%. Technology(XLK), Financials(XLF) and Energy(XLE) were hit hardest with more than 10% decline. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All major indexes in deep losses this week, the S&P 500 Index(SPX) posted its worst weekly performance in over five years. Nasdaq Composite Index(COMP) and Russell 2000 Index(RUT) officially entering bear markets this week. Declined 22.9% and 25.6% from their peak. While Dow Jones Industry Averages (DJI) and S&P 500 index(SPX) dropped 15% and 17.5% from their peak respectively, also in deep correction territory.

SPX long-term technical support 4740-4800 area, around 300points lower from current level. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stock markets declined in a holiday-shortened week. For the week ended Thursday, the Shanghai Composite Index(SSE) shed 0.28% while the blue chip CSI 300 fell 1.37%. In Hong Kong, the benchmark Hang Seng Index declined 2.46%. (refer to the above weekly performance table). Stock markets on the mainland and Hong Kong were closed Friday for the Qingming Festival.

Key highlights for the week and outlook for China/HK:

1.    Following the Trump administration’s decision to hike tariffs on China by 34%, Beijing said that it would also impose a 34% tariff on all U.S. imports starting April 10. It also announced several other measures taking aim at bilateral trade activity, effective immediately. The measures included: restricting exports of several kinds of rare earths, launching an antidumping probe into medical CT X-ray tubes from the U.S., halting poultry and sorghum imports from a handful of U.S. companies, adding 11 U.S. defense companies to a so-called unreliable entity list, and other actions. Several Chinese government ministries simultaneously announced the measures Friday evening. 

2.   China’s rapid response and the wide range of restrictions surprised some analysts, who had expected a more measured response. In the past, Beijing waited until U.S. duties were in place before retaliating. The latest U.S. tariffs will increase levies on nearly all Chinese products to at least 54%, Bloomberg reported. U.S. tariffs may reduce China’s GDP between 1% and 2%, a shortfall that the central government has the capacity to offset. Moreover, they expect that China will roll out more fiscal stimulus in stages this year as it assesses the economic toll of tariffs and whether they can be negotiated down.

Refer to below .HSI stocks top 40 performance of the week.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

The Straits Times Index (STI) declined 3.69% to close at 3825.86 this week- its lowest in 10 weeks. The decline was led by the three local banks, PM Lawrence Wong warned U.S tariffs could trigger “full-blown global trade war”.

Top weekly gainers include defensive plays such as SingTel, ST engineering, Sembcorp Ind and REITs such as CapitaLand Ascendas REIT(CLAR) and Capitaland Integrated Commercial Trust(CICT). Refer to below STI stocks weekly performance table.

Maybank Research stock recommendations after post-tariffs as below.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.