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Global markets were thrown into disarray Monday morning as deepening U.S.-China trade tensions sparked a sweeping selloff across Asia and beyond. President Donald Trump’s unwavering stance on tariffs rattled investors, with many now pricing in the possibility of multiple Federal Reserve rate cuts starting as early as May. Amid the escalating rhetoric, Trump reiterated his commitment to resolving the U.S. trade deficit before considering any deals with Beijing, prompting Chinese officials to assert that their planned retaliatory steps had already been acknowledged by the markets.
The response was swift and severe. Futures markets pointed to as many as five rate cuts this year, sending Treasury yields into a sharp decline and pushing investors toward safer assets. Despite the steep market losses—nearly $6 trillion wiped off valuations last week alone—Trump appeared unfazed, doubling down on policies he’s long championed. Analysts expressed concern that the economic shockwaves from these policies could plunge both the U.S. and global economies into recession.
Asian equity markets bore the brunt of the turmoil, with Japan’s Nikkei plummeting 6.6% and South Korea down 5%. Chinese blue chips slid 6.3%, and Taiwan’s reopening after a two-day break saw its index tumble nearly 10%, prompting regulatory intervention to limit short selling. European markets followed suit in early futures trading, with steep drops across major indexes, while oil prices sank on fears of waning demand. Brent crude and U.S. oil both slipped by over a dollar per barrel, reflecting broader concerns about the economic slowdown.
Currency markets saw a retreat from the dollar as investors fled to safer havens like the yen and Swiss franc. The euro remained steady, while the Australian dollar continued to lose ground. Analysts expect that rising tariffs could soon trigger inflationary pressures, especially in consumer goods, squeezing corporate margins just as earnings season begins. Goldman Sachs warned that forward guidance may be scarce in upcoming reports, as companies weigh whether to pass on higher costs or absorb the hit. Even gold, a typical safe haven, saw modest losses—suggesting that investors may be liquidating assets to cover broader market losses in what could spiral into a vicious cycle.
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(Source: BBC | CNBC Asia)
