(Reuters) -Asian share markets and U.S. stock futures tumbled on Monday as fears of a global trade war led investors to ramp up bets on the risk of recession and a U.S. rate cut as early as May.
Monday’s rout extends a two-day selloff that wiped trillions of dollars from equity values after U.S. President Donald Trump’s administration announced sweeping tariffs last week.
COMMENTS:
TONY SYCAMORE, MARKET ANALYST, IG, SYDNEY
“Things have gone from bad to worse this morning. The lack of reaction from Trump and from Bessent, in terms of their concern levels appearing to be very, very low in terms of the market dislocation. If there isn’t some sort of walking back of the announcements, then we’re heading for a liquidity event and liquidity will get sucked out of these markets big time across all asset classes. We’re already seeing that. We’re going to see obviously the U.S. dollar return to being the kingmaker except against the yen.”
JOHN MILROY, PRIVATE WEALTH ADVISOR, ORD MINNETT, SYDNEY
“All the conversations I have had with clients are more about when do we buy something rather than sell. This is leveraged selling that has no choice. I have fear for some of those private credit shops as prices and credit spreads swing wildly.
“Anything trading at elevated multiples and globally exposed will struggle. Key in the short term is if China pulls the pin on a big stimulus package directed at consumers. The broader market was already expensive, always had to be a reckoning. Here it is. Next comes the earnings changes.”
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT
“Futures are down 4%. One of the problems is that people were looking for some kind of comment over the weekend from somebody in the administration that would indicate some possible negotiation or maybe a change in the tariffs. But they seemed to dig in their heels so we’re down more than 4%.”
“Some of it might be jockeying because of margin calls or people trying to get ahead of margin calls, or pre-positioning or selling into the news for what they think is going to happen tomorrow morning. With Friday being such a big down day, you’d imagine somebody’s getting a margin call somewhere.”
“People are real nervous about the uncertainty this brings, the potential decline in earnings, the fact the Federal Reserve has said they are going to wait and stay on hold until they get more clarity. If the Fed isn’t coming to the rescue, then who else is going to come to the rescue?”
“People are afraid the worst is yet to come. They’re worried about a market crash. They’re worried about what follows, a recession here domestically and then globally, leading to a possible depression.”
KAREN JORRITSMA, HEAD OF EQUITIES, AUSTRALIA, RBC CAPITAL, SYDNEY
“Trump got us into this. But what can get us out of it? It’s not him, if there’s no clear line of sight here to the exit point for this, or the catalyst for this to be over – that’s my concern. I think he felt he had control. But he hasn’t – he’s lost control.
“It’s gone too far. The Chinese have got involved…It’s like when you start a fight at the Christmas family party and then suddenly everyone’s fighting and then you go, hang on a second guys, I just did this for a bit of fun. Well, the fun’s over and now there’s real world ramifications, unfortunately. It can go too far.”
MICHAEL MCCARTHY, CHIEF EXECUTIVE OFFICER, MOOMOO AUSTRALIA, SYDNEY
“It’s indicating there’s no end in sight to the selling at this stage. The momentum we’re seeing, the spike in volatility, the huge volumes – all of those are telling us this is only just beginning… It’s spread to every market. Bonds are rallying, gold’s holding up well, whereas anything growth-exposed is getting trashed. Oil prices are down $10 a barrel in less than a week. It is getting very ugly for growth prospects out there.”
DEAN FERGIE, DIRECTOR, CYAN INVESTMENT MANAGEMENT, MELBOURNE
“I feel it shouldn’t be that bad for Australia. With the 10% tariff being equal lowest globally, it should over time give the nation a good competitive advantage.
“I expect a lot of panic selling this morning but over the coming days some level of rationality should prevail and we’ll see some buying support come in. The sectors to watch will be the financials/fund managers impacted by global market weakness, and the global discretionary stocks.”
ANGELO KOURKAFAS, SENIOR INVESTMENT STRATEGIST, EDWARD JONES, ST LOUIS
“Fear is what continues to drive market action since the April 2nd tariff announcement. I think many investors are fearing the worst-case scenario of a prolonged trade war.”
“Until we get an off-ramp and some indication that we potentially are pivoting to cutting deals to lower tariffs, that sentiment will remain fragile.”
Over the weekend, “what we heard from the White House, their commentary didn’t really provide much relief or didn’t show any indication that the administration is backing away from these very aggressive tariffs.”
“As we try to gauge upside and downside, a lot of the damage has been done. So for long-term investors, it is really the time to kind of start being a little more greedy when others are fearful, recognizing there’s still a lot of uncertainty out there, which relies on headlines and that’s not an ideal environment to make bold predictions.”
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
“The lack of any policy response from the Trump administration on the market sell-off is adding to the uncertainty, reinforcing the idea that the current trajectory may remain unchanged in the near term. Unless we see a clear pivot from policymakers, volatility is likely to stay elevated, and the path of least resistance for risk assets remains to the downside.”
“The market is increasingly questioning the sustainability of still-elevated P/E multiples, especially as trade risks threaten to dampen both consumer and business sentiment. In risk periods like this, multiples tend to contract while earnings estimates also face downside pressure — a double hit for equities.”
SEAN CALLOW, SENIOR FX ANALYST, ITC MARKETS, SYDNEY
“It will be all hands on deck for Asian policymakers today, but they know that they have limited control over market panic. 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.”
ANGELO KOURKAFAS, SENIOR INVESTMENT STRATEGIST, EDWARD JONES, ST LOUIS
“Fear is what continues to drive market action since the April 2nd tariff announcement. I think many investors are fearing the worst-case scenario of a prolonged trade war.”
“Until we get an off-ramp and some indication that we potentially are pivoting to cutting deals to lower tariffs, that sentiment will remain fragile.”
DAVID SEIF, CHIEF ECONOMIST FOR DEVELOPED MARKETS, NOMURA, NEW YORK:
“In market selloffs like this, panic and forced selling via margin calls can dominate for a while. That’s not to say that it isn’t based on a very real negative event, which is these tariffs. But I think the ensuing selloff can take on a life of its own. It wouldn’t surprise me if the downtrend lasts all week or longer, but neither would it shock me if the market finds stability sooner than that. Bottom line, I’m not sure when stocks will find a bottom, but I don’t think stocks are returning to their pre-April 2 levels anytime soon.”
MICHAEL BROWN, SENIOR RESEARCH STRATEGIST, PEPPERSTONE, LONDON
“You can’t rule out a short-term bounce at some stage, simply considering how far we’ve come in a short space of time, but a more durable rebound is going to need some kind of policy pivot. That seemingly won’t be coming from the Fed yet, with Powell signaling no need to hurry on Friday and upside inflation risks mounting, nor is it likely to come from Trump less than a week after unveiling his flagship policies.”
“Hence, risk aversion should persist for now and another choppy week of headline-watching surely awaits.”
KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO
“Financial markets are suffering an absolutely brutal selloff as Asian trading hours begin. After a series of Trump administration officials refused to countenance a reversal in the President’s seriously flawed tariff plans over the weekend, investors are marking down U.S. assets and lowering global growth forecasts even further. A flight to safety is underway in currency markets, with the yen and euro climbing against the dollar.”
(Reporting by the finance and markets team; Compiled by Megan Davies and Vidya Ranganathan)
