Brussels – Global stock markets are facing considerable instability following the recent announcement of tariffs by US President Donald Trump.

The President characterized the resulting financial turbulence as a necessary "medicine" for US economic growth.

Following the April 2 declaration of tariffs affecting numerous global partners, a wave of sell-offs commenced in Asia before moving swiftly to Europe.

European financial markets opened considerably lower on April 7, after ending the previous trading week on a low note – marking the worst week since March 2020. The downturn followed a nearly $5 trillion loss in value sustained by global stock markets, particularly impacting Asian exchanges.

On opening, major European indices fell sharply: Frankfurt's DAX lost 10 percent, Paris's CAC 40 dropped by 6.6 percent, and Milan's FTSE MIB index declined by 7.6 percent.

London’s market was not spared, recording a 5.2 percent drop, while Madrid fell by 4.66 percent.

In total, about 890 billion euros were wiped from the markets within three hours of trading.

The Eurostoxx 50 index, tracking the 50 largest companies in Europe, was expected to fall approximately 4 percent, reaching its lowest level in 16 months.

Meanwhile, Deutsche Bank issued warnings to its clients regarding the ongoing instability, and Swissquote Bank termed the situation a "bloodbath."

Particular distress was noted in Milan's stock exchange, where bank shares took a severe beating.

The FTSE MIB index fell to 32,050 points, with BPER and Popolare Sondrio experiencing losses exceeding 12 percent, while Monte dei Paschi di Siena, Banco BPM, and UniCredit lost around 10 percent.

Other affected stocks included Fineco, down 8.7 percent, and Mediolanum, which fell 9.7 percent.

Major firms such as Generali and Ferrari also saw losses around 7 percent and 7.95 percent, respectively.

The Asian markets faced the initial brunt of the downturn.

Shanghai's market opened down nearly 4.5 percent and ultimately closed over 7.3 percent lower.

Tokyo saw a decline of over 7.8 percent by closing.

Seoul recorded its worst session in almost a year, dropping 5.6 percent, while the Taiwan Stock Exchange reported a historic loss of 9.7 percent, amounting to a drop of 2,065 points on the Taiex index.

This occurred despite Taiwan's decision not to respond to the US tariffs with additional measures.

In response to the tariffs, China announced counter-tariffs of 34 percent on Made-in-China goods.

Subsequently, the Hong Kong stock market experienced its largest decline since the financial crisis of 1997, with the Hang Seng Index plummeting by 13.22 percent, heavily affecting banking and technology sectors.

Chinese officials have called for renewed negotiations with the US, stressing the need for equal consultation in resolving trade disputes.

The spokesperson for the Chinese Foreign Ministry criticized the US for pursuing hegemonic policies at the expense of international norms, labeling this approach as unilateralism and economic bullying.

In the United States, market sentiment has turned against President Trump, with investors expressing increasing concern about the potential for inflation and economic decline as a result of the tariffs.

Prominent investors, including Bill Ackman and Stanley Druckenmiller, have suggested that Federal Reserve intervention may be necessary.

On Wall Street, the VIX index, known as the "fear index," surged to 60 points, marking the highest level of volatility since the pandemic's onset in 2020. Furthermore, cryptocurrencies have seen a sharp decline, with Bitcoin losing nearly all gains achieved since Trump's election in November.

The total market capitalization of cryptocurrencies fell by 10 percent, dropping to $2.54 trillion, with Ethereum hitting an intraday low of $1.5, the lowest since October 2023.