Global stock markets have experienced significant declines following the announcement of a new trade war by U.S. President Donald Trump last week.

On Monday, markets from Asia to Europe and Wall Street witnessed steep falls, with panic spreading across global equities.

The pan-European Stoxx 600 index opened down 6 percent, later correcting to a decline of 5.2 percent by midday.

This followed an 8.4 percent drop in the index over the previous week, marking its worst performance in five years, with only the onset of the COVID-19 pandemic in 2020 producing a larger decline.

In Asia, the MSCI Asia Pacific Index dropped sharply, reflecting a 7 percent decline during Monday morning trading, the largest single-day drop since 2008. Notably, Hong Kong’s Hang Seng index fell by 13.2 percent in one day, making this decline comparable only to significant market crashes in 1987 and following the Tiananmen Square incident in 1989.

The Budapest Stock Exchange was also impacted, with the BUX index starting the day down more than 10 percent before recovering partially.

Among Hungarian blue-chip stocks, OTP Bank saw a dramatic decline of 15.4 percent at one point, while Mol, Magyar Telekom, and Richter also experienced losses.

In the United States, trading commenced with grim results, as the Dow Jones index dropped by 3.99 percent, the S&P 500 by 4.18 percent, and the Nasdaq by 4.21 percent.

A brief rally occurred when speculation arose that President Trump might suspend the implementation of tariffs for 90 days; however, this was quickly dismissed by the White House, leading to further declines.

Since the announcement of the tariffs, companies within the S&P 500 have collectively lost approximately $5.4 trillion in market value.

Economic analysts attribute the Monday downturn to a market mechanism known as leveraged investing, where investors purchase stocks on margin, effectively borrowing money.

Analysts explained the process wherein falling stock prices can trigger margin calls from brokerage firms, requiring investors to deposit additional funds or risk liquidation of their positions.

Consequently, many investors during Monday morning’s trading faced significant liquidations, exacerbating market declines, especially among large European banks and corporations.

Investor behavior reflected the necessity for liquidity, prompting sales—even of traditionally stable assets, such as gold—to fund margin positions as the market faced panic selling.

Furthermore, analysts predict that the prevailing uncertainty may continue to affect market sentiment moving forward.

Many speculate that stock prices will react to incoming news related to tariffs, creating an unstable environment for traders.

Experts note that this could lead to further volatility ahead, particularly if economic factors such as unemployment and corporate closures begin to materialize in response to the stock market’s turmoil.

Looking ahead, the broader implications of these developments for the U.S. economy remain uncertain, particularly regarding potential impacts on mid-term elections in 2026 and President Trump’s strategy concerning his administration's trade policies.