Financial markets worldwide experienced a sharp downturn on Monday following U.S. President Donald Trump’s announcement that tariffs would apply broadly to all countries.
His remarks, made aboard Air Force One, dampened hopes that the levies would be more targeted, fueling fears that escalating trade tensions could push the global economy toward recession.
With uncertainty looming, investors sought refuge in safe-haven assets. Sovereign bonds and the Japanese yen saw increased demand, while gold prices surged to yet another record high.
Meanwhile, stock futures reflected the market’s unease—S&P 500 futures dropped 0.8%, extending Friday’s sell-off, while Nasdaq futures plummeted 1.4%. In Europe, EUROSTOXX 50 futures slid 0.8%, and both FTSE and DAX futures recorded a 0.5% decline.
The European Union has signaled its readiness to retaliate with counter-tariffs, with German Chancellor Olaf Scholz reaffirming that measures would be taken if necessary. However, reports suggest that European officials are also considering a list of concessions to appease Washington and de-escalate tensions.
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Ajay Rajadhyaksha, head of rates markets at Barclays, voiced concerns over the financial landscape, stating, “For the first time in years, we find ourselves genuinely worried about risk assets. If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies.”
He also noted that, for the first time in several quarters, Barclays now favors core fixed-income investments over global equities.
Asian markets bore the brunt of the sell-off, with Japan’s Nikkei 225 plunging 4.1% to a six-month low. Automaker stocks suffered significant losses in response to Trump’s suggestion of imposing a 25% tariff on imported cars.
MSCI’s broad index of Asia-Pacific shares (excluding Japan) fell by 1.9%, while South Korea’s benchmark index tumbled 3.0%. In China, blue-chip stocks dropped 1.0%, despite data indicating that manufacturing activity inched higher in March, aligning with analyst expectations.
Trump is set to receive formal tariff recommendations on Tuesday, with an official announcement expected on Wednesday. Additional details regarding auto tariffs are anticipated the following day. As investors brace for further developments, all eyes remain on how global markets will navigate the turbulence triggered by escalating trade tensions.
REUTERS
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