Global Market Turmoil: Tariffs and Geopolitical Risks Hit U.S. Stocks and the Dollar

On February 24, 2026, Asian and European financial markets experienced a sell-off. India's Bombay Stock Exchange Sensex index fell by 1,069 points, closing at 82,226 points, with a single-day market capitalization loss of approximately 2.85 trillion rupees. The Nifty 50 index dropped by 288 points, falling below 25,450 points. This wave of decline continued the panic from Wall Street the previous day. On February 23, the Dow Jones Industrial Average in New York fell by 821.91 points, the S&P 500 index dropped by 1.04%, and the Nasdaq Composite Index also fell by over 1%. The U.S. Dollar Index also weakened. The market is simultaneously facing two familiar risks: former President Trump's tariff threats and renewed tensions in the Middle East. However, the deeper shock stems from an old technology—COBOL.

The "Creative Destruction": Shockwaves and Industry Restructuring

The direct trigger for the market decline was a piece of technical news. On February 23, the U.S. artificial intelligence startup Anthropic announced that its AI tool, Claude Code, is capable of automating the most complex exploration and analysis work in the modernization process of COBOL systems. The company stated that with the help of AI, the COBOL code modernization project, which originally required numerous consultants and several years, could potentially be shortened to just a few quarters.

COBOL (Common Business-Oriented Language) is a programming language born in 1959. Despite its age, it remains the cornerstone of core transaction systems for global finance, governments, and large enterprises. Anthropic cites data indicating that up to 95% of ATM transactions in the United States still rely on COBOL systems. This news triggered a chain reaction on Wall Street. The first to be hit was IBM, the technology giant deeply intertwined with COBOL and mainframe systems. Its stock price fell by 13.2% on the 23rd, marking its largest single-day drop since October 2000. Panic quickly spread throughout the software and services sector.

On the 24th, the IT sector in the Indian stock market became the hardest-hit area. Infosys shares fell by nearly 3.5%, while HCL Technologies, Mphasis, and Persistent Systems saw declines of up to 6%. Stocks such as Tata Consultancy Services, Tech Mahindra, and Wipro also experienced significant drops, leading to a 4.74% decline in the Nifty IT Index. This is not merely a simple sector rotation. The market is repricing the creative destruction brought about by AI. Over the past year or so, artificial intelligence has primarily been viewed as a tool to enhance productivity and reduce costs. Now, investors are beginning to assess its substitution risks—identifying which industries rely on outdated technological barriers or information asymmetry to maintain high profit margins, and how AI could potentially level these advantages.

The wealth management industry serves as an example. AI-driven planning tools can generate personalized strategies within minutes, systematizing financial advisory processes that previously relied on manual, repeatable efforts. Routine tax optimization and templated financial planning services are becoming commoditized. Companies whose core value is built on standardized workflows are facing pressure on their fee structures. However, the view that the entire industry will be eroded is overly simplistic. Sarah Chen, a partner at Allen & Overy and a cross-border tax expert, points out: algorithms perform well within a single tax law system, but high-net-worth clients’ assets are often spread across multiple jurisdictions, currencies, and regulatory environments. Residence rules, bilateral tax treaties, capital gains treatments are all evolving, and regulatory divergences among major economic blocs are widening. AI can analyze data at high speed, but it cannot independently interpret political risks or anticipate how future policies may reshape long-term financial structures. When complexity rises, human oversight and experience remain critical.

The essence of this AI panic trading is that capital is repricing around structural impacts, rather than short-term fluctuations in quarterly earnings. For investors, the core question is: does artificial intelligence strengthen a company's competitive position, or does it weaken the scarcity of its core services? Companies that can integrate AI to deepen customer relationships, expand geographic reach, and enhance governance frameworks will become stronger. Conversely, those reliant on narrow, process-driven services without substantial entry barriers will face more significant headwinds.

The Return of Tariff Weapons: Trump's "Clauses" and the Suspense in Global Trade

While the market is still digesting the impact of technological shocks, political uncertainties have followed closely. On February 23, former President Donald Trump warned on his social media platform Truth Social that any country attempting to play tricks regarding recent court rulings would face significantly higher tariffs. This statement was in response to a ruling by the U.S. Supreme Court on February 21, which declared tariffs imposed under the International Emergency Economic Powers Act invalid. In response, Trump stated that he would instead invoke Section 122 of the Trade Act of 1974 to implement a 15% global tariff.

Section 122 of the Trade Act of 1974, commonly known as the Presidential Tariff Authority, allows the President to impose an additional tariff of up to 15% on imported goods for a maximum period of 150 days when there is a significant balance of payments deficit. This provision has a low threshold for use, and the President holds considerable discretion. Trump's threat is not without basis. According to a Reuters report on February 24, the United States has already begun imposing a new 10% tariff, which may be raised to 15% in the future. The global trade environment may once again shift toward a confrontational mode.

From a geo-economic perspective, Trump's tariff threats have a dual effect. In the short term, they directly increase corporate costs and upward pressure on consumer prices, undermining market confidence in a soft economic landing. Claudia Bain, a senior fellow at the American Enterprise Institute, analyzes: The market was originally digesting the Federal Reserve's interest rate path, but now it must also price in escalating trade frictions. This is not just a matter of a 15% tax rate; it is the disappearance of regulatory certainty. Businesses are unable to make long-term investment decisions. In the long run, it may accelerate the further regional restructuring of global supply chains and intensify frictions among major economies.

Asian markets reacted swiftly. Despite some support from the return of Chinese and Japanese markets after holidays, overall sentiment remained cautious. The Indian rupee depreciated by 0.07% against the U.S. dollar on the 24th, reaching 90.95 rupees per dollar. Currency depreciation could trigger foreign capital outflows, further pressuring the stock market, while also increasing the cost of dollar-denominated imports, particularly crude oil, thereby exacerbating inflation risks and squeezing profits for companies reliant on imported raw materials. Deutsche Bank emerging markets strategist Rajeev Sethi noted: For emerging markets like India, this is a perfect storm. The global sell-off in tech stocks has dragged down its crucial IT services sector, tariff threats have hit export prospects, and a weakening local currency has added to the difficulty of macroeconomic management.

Tehran and Washington: The Persian Gulf Situation and Market Risk-Aversion Logic

Geopolitical risks have never been far away. On February 21, Trump responded to a reporter's question by stating that he is considering a military strike against Iran if it fails to reach an agreement with Washington. "I think it's fair to say I'm considering that option," he said, adding new uncertainty to an already tense regional situation. In response, Iranian Foreign Ministry spokesperson Esmail Baghaei warned on the 23rd that any U.S. attack—including a limited strike—would be considered an act of aggression and would provoke a response.

Although the new round of U.S.-Iran talks is scheduled to take place in Geneva, Switzerland, the public mention of military options has altered the market's risk calculations. The Persian Gulf region handles approximately one-third of the world's seaborne oil trade, with the Strait of Hormuz being a critical shipping chokepoint. Any escalation of military conflict would directly threaten global energy supplies, triggering a surge in oil prices and broader inflation concerns.

Historical experience shows that the impact of tensions in the Middle East on financial markets follows a clear path: rising oil prices, heightened inflation expectations, constrained central bank monetary policy space, downward revisions to economic growth forecasts, sell-offs in risk assets, and capital flowing into traditional safe-haven assets such as gold, the US dollar, and US Treasury bonds. However, the current situation is more complex. The US dollar has not strengthened due to its safe-haven attributes during this turbulence; instead, it has declined in sync with US stocks. This reflects that the dominant market logic at present is the premium for policy uncertainty outweighing the demand for geopolitical safe havens. Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, pointed out: The market is simultaneously pricing in multiple risks: the erosion of profit foundations by AI, the return of trade wars, and potential conflicts in the Middle East. When uncertainties arise from all directions and are interconnected, traditional safe-haven asset correlations may temporarily break down. Investors' first choice is to reduce risk exposure and hold cash while waiting and observing.

The movement of gold prices on the 24th confirmed this complexity. Despite rising geopolitical risks, COMEX gold futures prices fell by 1.70%. Analysts pointed out that this may be due to market expectations that a higher interest rate environment will persist for a longer period (stemming from potential inflationary pressures), which has weakened the appeal of non-yielding assets like gold, while dollar-denominated gold is also affected by fluctuations in the U.S. dollar. This divergence illustrates the current confusion in market pricing mechanisms.

Market Structure Vulnerability: Derivatives Expiration and Liquidity Issues

Beyond fundamental factors, the market's own structure amplified the intensity of this decline. February 24 coincided with the monthly expiration date for derivatives of India's Nifty 50 index. Around derivative expirations, traders typically need to close out or roll over their positions. As a large number of option positions are adjusted, the underlying index often experiences more pronounced volatility. The unwinding of long positions and new hedging activities both increase selling pressure.

Meanwhile, option sellers (typically institutional market makers) will attempt to anchor prices near key strike prices, which may intensify intraday volatility. A derivatives trading head in Mumbai, who wished to remain anonymous, revealed: "When the market experiences one-way movement due to macro news, the hedging operations of option market makers create positive feedback, accelerating market movements. Today in the IT sector, we saw liquidity rapidly evaporate in some small and mid-cap stocks, causing even modest sell orders to trigger significant declines. This kind of temporary liquidity drought due to technical factors can act as an amplifier for declines amid panic sentiment."

The global market also exhibits fragility under interconnected dynamics. The MSCI Global Index has declined for the second consecutive day. The Euro Stoxx 600 Index remains relatively stable but is still near its historical high. Although U.S. stock index futures rose slightly by 0.2%-0.3% in pre-market trading on the 24th, it is difficult to reverse the downturn from the previous day's sharp decline. Jeffrey Young, former global head of foreign exchange at Citigroup and founder of Deep Macro, believes: We are in a period where macro volatility is returning. Over the past few years, markets have grown accustomed to a low-volatility environment supported by central bank liquidity. However, now fiscal policies, industrial policies, and geopolitical factors have become the primary drivers. The unpredictability and interconnectedness of these factors are higher, leading to more intense 'knee-jerk reactions' in the market.

The market turbulence triggered by AI technology panic, trade policy threats, and geopolitical tensions marks the dawn of a new era. This is no longer merely a cyclical business fluctuation, but a structural upheaval driven by the convergence of technological revolution, great-power competition, and the reshaping of the global order. For enterprises, core competitiveness must be redefined; for investors, risk models require updating; for policymakers, the challenge of balancing inflation, growth, and security has intensified. The market decline on February 24 may represent a severe stress test in this prolonged restructuring process. As old pricing frameworks become obsolete and before new consensus is formed, volatility will become the norm. Storms in the Persian Gulf, tweets from Washington, or even a single line of code updated in Silicon Valley can trigger massive waves in the deep ocean of global capital.