Stock Slump Deepens as Tariffs Sour Risk Sentiment: Markets Wrap

(Bloomberg) -- Global equities sold off for a fourth day ahead of President Donald Trump unveiling a fresh round of tariffs and mounting concerns about economic impact from a global trade war.

Stocks dropped from Sydney to Hong Kong, with the Nikkei-225 sinking to the lowest level in more than six months. Equity-index futures for the US and Europe slid. Gold touched a fresh record high and US Treasury yields declined, spurred by haven demand.

Money managers around the world are de-risking their portfolios or refraining from taking big positions as they remain wary about the announcement of the so-called reciprocal tariffs and the impact on the economy. Goldman Sachs Group Inc. economists now forecast both the Federal Reserve and European Central Bank will cut interest rates three times this year as the curbs on trade hurt momentum. 

“All these haphazard and aggressive policy changes that we’ve seen from the Trump administration are having negative economic impacts,” said Katrina Ell, director of economic research at Moody’s Analytics. “And that’s why we’re seeing the rhetoric US recession odds rising quite aggressively. It’s a concerning picture we’re going into.”

Trump said he plans to start his reciprocal tariff push with “all countries,” tamping down speculation that he could limit the initial scope of tariffs set to be unveiled April 2. The president, who has touted his upcoming measures as a ‘Liberation Day,’ escalated his trade war last week by slapping a 25% levy on all cars not made in the US. Reciprocal duties will be “very lenient,” he said previously.

Depending on the scale of what’s announced, Bloomberg Economics sees scope for a hit to US GDP and a jolt to prices over the coming years, given the possibility of massive tariff hikes on imports from some countries.

Exuberance over Trump’s blueprint for the economy had vaulted the S&P 500 to a record high in February. Since then, the index has slumped and is poised for its worst quarter since 2022. More volatility is likely Monday given it’s the end of the quarter.

“There’s just a huge amount of unknowns when it comes to the outlook for tariffs,” said Kerry Craig,” global market strategist at JPMorgan Chase & Co. asset management unit. To diversify, “we are looking toward Europe a little bit more, given the fiscal room there is for expansion there — some of the rally we’ve seen in the defense space. We’re also looking toward China.” 

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Oil pushed lower after Trump said he would consider “secondary tariffs” on Russian oil and those who buy it, if a ceasefire with Ukraine can’t be reached. Russia is the world’s third largest producer of crude and levies could have far reaching effects on the global economy. 

In China, factory activity continued to expand in March, a welcome news for the world’s No. 2 economy.

Thai stocks dropped on Monday after trading was suspended Friday following a quake in Myanmar that shook buildings and triggered evacuations. South Korean stocks fell as well, hurt by concerns about US trade levies just as a 17-month long ban on short selling ended.

This week, Australia’s central bank is likely to keep its key rate on hold amid a tight national election while European activity data is also due. US jobs data at the end of the week will also be watched. 

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.6% as of 1:50 p.m. Tokyo time
• Japan’s Topix fell 3.4%
• Australia’s S&P/ASX 200 fell 1.5%
• Hong Kong’s Hang Seng fell 1.7%
• The Shanghai Composite fell 1%
• Euro Stoxx 50 futures fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was little changed at $1.0834
• The Japanese yen rose 0.5% to 149.08 per dollar
• The offshore yuan rose 0.2% to 7.2582 per dollar

Cryptocurrencies

• Bitcoin fell 0.9% to $81,747.43
• Ether fell 0.5% to $1,805.56

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.20%
• Australia’s 10-year yield declined nine basis points to 4.37%

Commodities

• West Texas Intermediate crude fell 0.4% to $69.07 a barrel
• Spot gold rose 0.9% to $3,112.89 an ounce

This story was produced with the assistance of Bloomberg Automation.

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