Global Stocks Tumble as Tariff Fears and Recession Concerns Grow
World markets experienced sharp declines on Monday, with gold prices hitting a record high as global trade tensions escalated. U.S. President Donald Trump’s remarks on Air Force One indicated that tariffs would likely apply to all countries, intensifying concerns that a trade war could trigger a global recession. Trump’s comments dashed hopes that the levies would be limited to countries with the largest trade imbalances, and his upcoming tariff announcements added to the uncertainty.
European and Asian markets were significantly affected, with the STOXX 600 falling 1% and major indexes in Frankfurt, London, and Paris losing between 0.8% and 1%. In Asia, Japan’s Nikkei led the downturn with a 4.1% drop, hitting a six-month low, particularly due to worries over a 25% tariff on imported cars. The MSCI index for Asia-Pacific shares excluding Japan also dropped 1.9%. Investors sought refuge in sovereign bonds, the Japanese yen, and gold, which surged to an all-time high.
The market’s unease was compounded by analysts at Goldman Sachs raising the probability of a U.S. recession to 35%, citing potential tariff hikes and disappointing economic data. Core inflation exceeded expectations, and consumer spending lagged, adding to recession fears. The upcoming March payrolls report, as well as factory, service, and trade data, are expected to provide further insight into the U.S. economic outlook. Bond markets responded by pushing down U.S. Treasury yields, reflecting growing concerns over a slowing economy.
Gold and oil prices saw notable increases as investors looked for safe assets amid economic uncertainty. Gold hit an all-time high of $3,128.06 per ounce, while oil prices saw modest gains, with Brent crude rising 0.6%. Meanwhile, Trump’s potential secondary tariffs on Russian oil buyers, in response to Moscow’s actions in the Ukraine conflict, added to the volatility in global markets. With the Federal Reserve’s rate decisions and key economic reports ahead, market sentiment remains highly uncertain.
Source:Reuters