The U.S. stock market has recorded its worst quarterly performance since 2022, major foreign media reported. Experts analyzed that amid heightened market uncertainty regarding President Donald Trump's tariff policy, economic indicators have also worsened, raising concerns about a recession.
Earlier, the Trump administration announced on April 2 that it would unveil reciprocal tariffs. It is expected to impose tariffs of up to 20% by country. The White House claims that this could secure an annual revenue of $600 billion (approximately 883 trillion won).
In addition, the White House is reviewing the application of a 1977 law that grants the president emergency powers to impose a 20% tariff on all imports. An executive order imposing a 25% tariff on all imported vehicles has already been signed.
◇ Tumultuous U.S. stock market… weakness in tech stocks
Consequently, the stock market is on a downward spiral. According to the Washington Post (WP) and the Wall Street Journal (WSJ) on the 31st (local time), the tech-heavy Nasdaq index has fallen 10.4% so far this year. The S&P 500 index decreased by 4.6%, and the Dow Jones also dropped nearly 1%. In particular, the so-called "Magnificent Seven" of U.S. tech stocks (Microsoft, Meta, Amazon, Alphabet, Apple, NVIDIA, Tesla) have seen five stocks drop more than 10% this year, dragging down the overall market.
In particular, the automotive industry is facing falling stock prices due to concerns over rising costs of imported components. Among major companies, only Ford saw a slight increase, while General Motors (GM) and Stellantis dropped by 12% and 14%, respectively. Tesla fell by 36% due to growing consumer backlash against CEO Elon Musk. Dan Ives, an analyst at Wedbush Securities, told WP, "The tariff could raise the average vehicle price by $5,000 to $10,000 (approximately 7.38 million to 14.77 million won)."
Consumer sentiment has also cooled. Expenditure on consumer spending fell by 0.6% in January and only increased by 0.1% in February. The consumer confidence index has been declining continuously this year, hitting its lowest point since 2022. The consumer expectations index reached its lowest level in 12 years. Consequently, consumer-related stocks in footwear, clothing, and luxury goods fell nearly 20% in March, according to WP.
◇ Investment funds leaving the U.S., flowing into Europe and gold
As a result, investors are pulling out of U.S. tech stocks and moving into safe assets like gold. According to the WSJ, a March global fund manager survey by Bank of America showed that the number of investors reducing their holdings in U.S. stocks reached an all-time high. Meanwhile, gold prices have risen by 19% this year. According to the Associated Press (AP), the international gold price briefly surged to $3,160 per ounce, setting a new record.
Overseas markets, including Europe, are also becoming alternatives. The STOXX Europe 600 index has outperformed the S&P 500 by 9.8 percentage points this year, marking the largest margin since 2015. Notably, European defense stocks, such as Rheinmetall in Germany and Thales in France, have seen their stock prices more than double and increase by over 77%, respectively. This is due to European countries strengthening their self-defense capabilities in response to the ongoing difficulties in the Russia-Ukraine ceasefire.
John Porter, Chief Investment Officer (CIO) of Newton Investment, told the WSJ, "Undervalued European stocks could become the most attractive investment destinations over the next 2 to 3 years," adding, "There are more reasons than simply being inexpensive."