Chen Li
The global trade system is currently undergoing the most severe shock since World War II. On April 2, the “reciprocal tariff” policy led by the Trump administration officially took effect, immediately triggering a chain reaction in global markets. On April 3, the S&P 500 index plunged nearly 5%, marking its worst single-day performance since June 2020, with a loss of over USD 2.4 trillion in market value in just one day. The Nasdaq index also fell by 4% on April 4, officially entering a bear market, while the European STOXX 600 index dropped 2.7% on the same day.
The sharp fluctuations in the stock market reflect investors’ panic, and in response to the uncertainty caused by tariff policies, many investors fled from high-risk assets such as stocks and shifted towards assets considered “safe havens.” However, amid the turmoil in the stock market, funds are flowing into the bond market, and the yields on sovereign bonds in some countries are falling, reflecting the increased demand for risk aversion as uncertainty rises. After a significant depreciation, the U.S. dollar index rebounded to around 103, while the Swiss franc and Japanese yen showed strong performance. On April 7, the Japanese yen rose by 1% against the U.S. dollar, and the Swiss franc gained 0.7%. These changes indicate that investors are seeking lower-risk assets, with safe-haven currencies becoming refuges in times of turmoil due to their stability, low risk, and ability to preserve value during crises.
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