Global markets took another hit on Friday, as escalating trade tensions and a sharp selloff in bonds rattled investors, triggering a flight from U.S. assets and safe-haven scramble.

Markets in turmoil

In Asia, Japan’s Nikkei dropped 4.3% while South Korean stocks slid nearly 1%. European stocks also reversed early gains, with the STOXX 600 finishing down nearly 1%, marking a 1.7% weekly loss — one of its most volatile in recent history.

U.S. futures for the S&P 500 and Nasdaq swung wildly throughout the day, briefly falling as much as 2% before rebounding by as much as 1.6%, reflecting the deep uncertainty gripping markets.

Dollar drops, safe havens surge

The U.S. dollar weakened significantly, falling to its lowest in a decade against the Swiss franc and hitting a six-month low versus the yen. The euro surged 1.7% to $1.13855 — its highest since February 2022 — while gold reached a fresh record high of $3,210 per ounce, gaining 1.1% as investors rushed to safe-haven assets.

Trade war escalates

Investor anxiety deepened as President Donald Trump hiked tariffs on Chinese goods to an effective rate of 145%. China retaliated by raising its own tariffs, now reaching as high as 84%, fueling fears of a prolonged and damaging trade war.

Despite reassurances from U.S. Treasury Secretary Scott Bessent that over 75 countries were seeking trade talks, and Trump expressing optimism about reaching a deal with China, uncertainty remains high.

“There’s clearly an exodus from U.S. assets,” said Kyle Rodda of Capital.com. “This goes beyond fears of slower growth — it’s about confidence.”

Bond market under pressure

U.S. Treasuries faced heavy selling, with the 10-year yield climbing to 4.45% — a weekly gain of 45 basis points, the largest since 2001. The 30-year yield surged to 4.90%, its biggest weekly jump since at least 1982.

“This isn't about inflation anymore,” said Allianz's Michael Krautzberger. “The market seems to be pricing in fears of a sharp slowdown or even recession — which could make the U.S. fiscal outlook even more dire.”

Oil mixed amid ongoing worries

Oil prices edged higher on Friday, with Brent crude up 1% at $63.97 a barrel. However, prices are still heading for a second consecutive weekly decline, reflecting concerns over the trade war’s potential impact on global demand.

Outlook: uncertainty reigns

“The short-term outlook for risk assets remains shaky,” said Vasu Menon of OCBC Bank. “Growth and inflation worries, unpredictable sentiment, and constant changes on the trade front make for an unstable environment.”

As global markets reel from a barrage of shocks, investors are bracing for more volatility in the days ahead. Photo by bfishadow on Flickr, Wikimedia commons.