Extreme volatility plagued global stock markets on Monday, with Wall Street swinging in and out of the red as Donald Trump defied stark warnings that his worldwide trade assault will wreak widespread economic damage, comparing new US tariffs to medicine.
A renewed sell-off began in Asia, before hitting European equities and reaching the US. It was briefly reversed amid hopes of a reprieve, only for Trump to threaten China with more steep tariffs, intensifying pressure on the market.
China said on Monday it would not cave in to threats after Trump vowed an additional 50% tariffs on its goods if Beijing did not retract planned countermeasures.
The US president later dampened hopes of a reprieve further when he told reporters in the Oval Office he was “not looking at” pausing tariffs to allow for negotiations.
After several days of heavy selling, European stock markets are on track to open higher.
The futures market is indicating that stocks will rally today in London, with the FTSE 100 share index being called up 167 points, or 2.2%. That would recover about half of yesterday’s losses, and lift the ‘Footsie’ back up from Monday’s one-year low.
Germany’s DAX is also set for a rally – it’s up 2% in pre-market trading.
Here is a summary of other overnight developments:
• China’s government says it will “fight to the end” if the US continues to escalate the trade war, after the US president threatened 50% additional tariffs in response to Beijing’s retaliatory measures, ramping up the chances of a disastrous stand-off between the two economic superpowers. China’s commerce ministry accused Washington of “blackmail” and said Trump’s threats of steeper tariffs if Beijing did not reverse its own 34% reciprocal tariff were a “mistake on top of a mistake” and that China would “resolutely take countermeasures”.
• Asian markets appeared to improve slightly in early trading on Tuesday, a day after a torrid Monday on global markets that prompted the billionaire investor Bill Ackman, one of the US president’s backers in the 2024 race for the White House, to call for a moratorium.
• Tokyo traded up more than 6%, recovering much of Monday’s drop, after Japanese prime minister Shigeru Ishiba held talks with Trump. Nippon Steel added about 11% after Trump launched a review of its proposed takeover of US Steel that was blocked by Joe Biden, his predecessor.
• Hong Kong gained more than 2% but was well off recouping Monday’s loss of more than 13% that was the biggest one-day retreat since 1997.
• Shanghai was also up on Tuesday after China’s central bank promised to back major state-backed fund Central Huijin Investment in a bid to maintain “the smooth operation of the capital market”. Sydney, Seoul, Wellington and Manila also rose.
• The advance followed a less painful day on Wall Street, where the S&P and Dow fell but pared earlier losses, while the Nasdaq edged up. Oil prices also enjoyed some respite, gaining more than 1%.
• Others did not fare as well, amid analyst warnings that things could get worse. Taipei shed more than 4% to extend the previous day’s record loss of 9.7%, while Singapore also suffered further selling. Trading in Jakarta was suspended soon after the open as it plunged more than 9% as investors returned from an extended holiday, while the bourse in Vietnam – which has been hit with 46% tariffs – shed 5%.
• The European Commission has proposed counter-tariffs of 25% on a range of US goods, while saying it stands ready to negotiate a “zero for zero” deal with Trump. The 27-member EU – already hit with tariffs on vehicles and metals – faces another 20% on other items from Wednesday. EU trade commissioner Maroš Šefčovič told a news conference: “Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise.”
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