Global Financial Market Turmoil: Trump's Policies Have Far-Reaching Impacts

Recently, the global financial markets have experienced a severe震荡. As the global tariff war initiated by Trump intensifies, concerns about a recession in the US economy are growing. On March 10, US stocks faced a "Black Monday," with all three major indexes suffering significant declines. The Dow Jones Industrial Average fell by 2.08%, the Nasdaq dropped by 4%, and the S&P 500 decreased by 2.7%.

The cryptocurrency market has not been spared either. Bitcoin briefly fell below $77,000, reaching $76,560, with a daily decline of over 8%. Ethereum performed even more poorly, briefly dropping below $1,800, hitting a low around $1,760, returning to price levels from four years ago.

However, the market seems to have begun showing signs of recovery. The price of Bitcoin has returned to $82,000, and Ethereum has also risen above $1,900. But in the current complex external environment, whether this rebound indicates a market shift still raises many questions.

Trump's policies have had a profound impact on global financial markets. Looking back at the months leading up to the election, investors were keen to bet on Trump's deregulation, tax cuts, and immigration policies, driving the US stock market, the dollar, and Bitcoin all higher. The yield on the 10-year US Treasury bond once quickly climbed 60 basis points. Small-cap stocks performed particularly well, with the Russell 2000 index surging 5.8% the day after the election, marking the largest single-day gain in nearly three years. From election day to Trump's inauguration, the dollar index rose by about 6%. In the first month of Trump's presidency, the S&P 500 index and the Nasdaq index rose by 2.5% and 2.2%, respectively.

However, Trump's policies have also brought concerns about economic recession. Domestic economic indicators in the United States are mixed. Non-farm payrolls in February increased by 151,000, slightly below expectations; the unemployment rate is 4.1%. Inflation remains a serious issue, with the expected final value of the one-year inflation rate in February reaching 4.3%, the highest since November 2023. Consumer confidence has also declined, with a survey by the New York Federal Reserve showing that the proportion of households expecting their financial situation to worsen in the coming year has risen to 27.4%, the highest level since November 2023.

Multiple institutions have begun to warn about the risk of an economic recession in the United States. The Atlanta Federal Reserve Bank predicts that GDP may contract by 2.4% in the first quarter of this year. JPMorgan's predictive model shows that the probability of an economic recession in the U.S. has risen from 17% at the end of November last year to 31%.

Trump's tariff policy is one of the main reasons for the market turmoil. On February 1, Trump signed an executive order announcing a 10% tariff on American goods and a 25% tariff on Mexico and Canada. Although it was postponed for a month, on February 27, he suddenly announced that it would be implemented as scheduled and stated that an additional 10% tariff would be imposed on China. This series of actions triggered a strong reaction from Canada and Mexico, with both countries stating that they would take retaliatory measures.

The Trump administration faces numerous challenges, including a massive national debt, high budget deficits, illegal immigration issues, and sanctions against Russia. To address these problems, Trump has taken a series of measures, including cutting government spending, raising tariffs to increase revenue, and urging the EU to raise military spending.

Although these policies may bring long-term benefits, they will inevitably cause market turbulence in the short term. On March 10, Trump's remarks about the outlook for the U.S. economy further exacerbated market uncertainty, leading to a sharp decline in U.S. stocks and the cryptocurrency market.

Currently, the cryptocurrency market has shown signs of recovery, with the total market capitalization slightly rising to $2.77 trillion. The price of Bitcoin has returned to above $83,000. However, the market is still at the boundary between bull and bear phases, facing challenges in growth momentum and liquidity.

The future market direction will largely depend on the economic situation in the United States and Trump's policies. Some believe that the current warning signs of economic recession may prompt the Federal Reserve to cut interest rates in June. If the U.S. successfully implements quantitative easing, combined with relatively strong asset and liability fundamentals, it may reshape the economic cycle.

In the short term, tariff policies and economic uncertainty may continue to affect the market. The cryptocurrency market may require external liquidity injections to achieve a real reversal. In a non-recession scenario, Bitcoin's possible low point is around $70,000. However, if there is an economic recession, prices may experience a larger decline.

In the long run, many industry insiders remain optimistic about the market. Some analysts predict that Bitcoin could eventually reach $1 million, but it may experience a severe bear market before that. Data shows that large investors have accumulated over 65,000 Bitcoins in the past 30 days.

For investors, it is crucial to closely monitor factors such as tariffs, inflation, and geopolitical issues in the current market environment dominated by external economic conditions. Exercising patience and caution may be a wise choice until market trends become clearer.