SYDNEY- World share markets were in a tailspin on Monday after US President Donald Trump said tariffs would essentially cover all countries, stoking worries a global trade war could lead to recession.
Trump’s comments to reporters on Air Force One seemed to dash hopes the levies would be more limited. Trump is due to receive tariff recommendations on Tuesday and announce initial levels on Wednesday, followed by auto tariffs the day after.
Seeking any safe harbor from the trade storm, investors piled into sovereign bonds and the Japanese yen, while lifting gold prices to another all-time high.
S&P 500 futures lost 0.8 percent, extending Friday’s rout, while Nasdaq futures shed 1.4 percent.
EUROSTOXX 50 futures fell 0.8 percent, while FTSE futures and DAX futures were both down 0.5 percent.
The European Union was ready to respond with tariffs of its own, German Chancellor Olaf Scholz said on Sunday, but there were also reports the block was preparing a list of concessions to offer to Trump.
“For the first time in years, we find ourselves genuinely worried about risk assets,” said Ajay Rajadhyaksha, head of rates markets at Barclays.
“If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies,” he added. “For the first time in many quarters, we favor core fixed income over global equities.”
Japan’s Nikkei led the rout in Asia, losing an eye-watering 4.1 percent to a six-month low as automaker stocks continued to suffer fallout from Trump’s talk of 25 percent tariffs on imported cars.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.9 percent and South Korea 3.0 percent.
