Nasdaq futures drop 2.7% amid trade war concerns

The US stock market futures experienced a significant decline following President Donald Trump’s announcement of new trade tariffs on key trading partners, including Canada, Mexico, and China.

On February 3, Nasdaq 100 futures fell by 2.7%, reflecting broader market apprehensions.

The Russell 2000 index dropped 3.2%, while the S&P 500 and Dow Jones Industrial Average saw declines of 2% and 1.5%, respectively.

This sell-off is attributed to Trump's imposition of a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods, set to take effect on February 4.

“The market needs to structurally and significantly reprice the trade war risk premium with the announcements at the weekend roughly three times larger than what was envisaged,” commented George Saravelos, head of FX research at Deutsche Bank.

Tobin Marcus from Wolfe Research noted that markets may need to take Trump’s tariff agenda more seriously.

“If this new level of seriousness gets priced in suddenly, Monday could be a rough day for markets,” he suggested.

The impact of these tariffs has also extended to cryptocurrency markets, which saw over $450 billion exit in just 24 hours, resulting in a market capitalisation drop to $3.12 trillion.

This represents a decline of more than 13%, marking the lowest level since mid-November.

Despite the immediate fallout, some analysts believe that the trade war could eventually benefit Bitcoin (CRYPTO:BTC) prices due to potential dollar weakening and lower yields on US government securities.

Jeff Park from Bitwise stated that Trump’s trade actions might lead to Bitcoin prices “violently higher” in the long term.