Global markets sink as Trump’s tariff plans spark rate cut bets
Photo: Bloomberg
Major stock indexes in Asia tumbled on Monday as U.S. President Donald Trump remained steadfast in his pursuit of sweeping tariff plans, intensifying concerns over a potential global recession.
Futures markets moved swiftly to price in almost five quarter-point cuts in U.S. rates this year, pulling Treasury yields down sharply and hampering the dollar on safe havens, News.Az reports, citing Reuters.
The carnage came as Trump told reporters that investors would have to take their medicine and he would not do a deal with China until the U.S. trade deficit was sorted out. Beijing declared the markets had spoken on their retaliation plans.
"The only real circuit breaker is President Trump's iPhone and he is showing little sign that the market selloff is bothering him enough to reconsider a policy stance he has believed in for decades," said Sean Callow, a senior FX analyst at ITC Markets in Sydney.
Investors had thought the loss of trillions of dollars in wealth and the likely body blow to the economy would make Trump reconsider his plans.
"The size and disruptive impact of U.S. trade policies, if sustained, would be sufficient to tip a still healthy U.S. and global expansion into recession," said Bruce Kasman, head of economics at JPMorgan, putting the risk of a downturn at 60%.
"We continue to expect a first Fed easing in June," he added. "However, we now think the Committee cuts at every meeting through January, bringing the top of the funds rate target range down to 3.0%."
S&P 500 futures slid 3.5% in volatile trade, while Nasdaq futures dived 4.4%, adding to last week's almost $6 trillion in market losses.
The pain likewise engulfed Europe, with EUROSTOXX 50 futures down 4.4%, while FTSE futures lost 2.1% and DAX futures 4.2%.
Japan's Nikkei sank 6.6% to hit lows last seen in late 2023, while South Korea dropped 5%. MSCI's gauge of Asia-Pacific shares fell a gut-wrenching 7.8% to head for its largest single-day drop since 2008.
Chinese blue chips lost 6.3%, as markets waited to see if Beijing would respond with more stimulus. Taiwan's main index, which had been shut on Thursday and Friday, tumbled nearly 10%, leading policymakers to curb short selling.
All of emerging Asia was also under water, with India's Nifty 50 sinking 4%.
The gloomier outlook for global growth kept oil prices under heavy pressure, following steep losses last week.
Brent fell $1.35 to $64.23 a barrel, while U.S. crude dived $1.395 to $60.60 per barrel.
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