The fact that US President Donald Trump announced higher tariffs on goods from a wide range of countries on Wednesday has sent shockwaves through the stock markets. On Friday afternoon Danish time, China has chosen to respond, and investors seem to be reacting violently to this.
The C25 index, which consists of the 25 most traded Danish shares, is at 1 p.m. down around 4.2 percent. The decline has accelerated particularly after China's announcement. You now have to go all the way back to the autumn of 2022 to find a lower level for the index.
Danske Bank, Nordea, Sydbank and Jyske Bank are the hardest hit on Friday, falling by up to ten percent at 12:30 p.m. According to Jacob Pedersen, head of equity research at Sydbank, investors feared precisely the scenario that is unfolding.
- It is a full-scale trade war that we are in now, he says and adds:
- And if there is one thing we can be absolutely sure of, it is that higher tariffs result in lower growth, so this is a kidney blow to the economy, he says, referring to China's response.
China has announced that it will impose an additional 34 percent tariff on all American goods from April 10. With higher tariffs, Donald Trump wants to force foreign companies to produce their goods in the United States and create American jobs.
The challenge, however, is that Americans also risk being hit by the new tariffs. This is because many goods are not produced in the United States at all. Therefore, a lot of goods will still have to be imported, which will be more expensive than they have been so far.
The higher tariffs have made investors nervous about where the world economy is heading, and this can be seen in today's prices, says Jacob Pedersen.
- There is also a fear that inflation will return, he says.
On Thursday, the C25 index - together with many international stock indices - took the first big hit after Trump's announcement on Wednesday.
In isolation, the C25 fell by 2.4 percent - while several of the largest American indices saw their biggest falls in a single day since 2020.
Updated on April 4 at 1:37 p.m.
jel /ritzau/
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