Global equity markets fell sharply and gold hit a fresh record high on Monday after President Trump said his tariffs would essentially cover all countries, stoking worries that a global trade war could lead to a recession.
By the close of trading in Europe, the FTSE 100 was down almost 1 per cent on the day at 8,582.81, for its worst month since October 2023, as investors sought alternative assets on the eve of Donald Trump’s “liberation day”, when he will announce most of the new levies, with auto tariffs following the day after.
The president said he wants to shrink a $1.2 trillion global goods trade deficit by raising US tariffs to levels charged by other countries and counteracting their non-tariff trade barriers.
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The more domestically focused FTSE 250 fell 2 per cent to 19,475.48, bringing its monthly drop to 4.2 per cent. On the Continent, Germany’s Dax was 1.3 per cent lower on the day and 1.7 per cent down in March, while the CAC40 in Paris fell 1.6 per cent on the session and 4 per cent on the month. Advertisement Gold, regarded as a safe haven in turbulent times for equities, had another stellar day with a rise of 1.2 per cent to $3,122.80 an ounce, a new record, for a monthly gain of 10.1 per cent. There was also a flight to government bonds, with the yield on the benchmark UK 10-year government gilt slipping to 4.66 per cent. Yields on benchmark German, French and US bonds were also lower.
Larry Fink, chief executive of BlackRock, the world’s largest asset manager, said in his closely followed annual letter to investors that clients “are more anxious about the economy than at any time in recent memory. I understand why.”
Talley Léger, chief market strategist at The Wealth Consulting Group, a US financial adviser, said: “The current market narratives centre on this fear of stagflation, which conceptually could be the worst possible combination for stocks.
“So in a slowing growth environment, earnings would decelerate, or even collapse in a recession. That’s another big fear in the market. And on the other side, spiralling inflation would squeeze stocks on the valuation channel.”
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Mohit Kumar, an economist at Jefferies, the stockbroker, said: “It’s all about the tariff uncertainty and how much tariffs and counter-measures will be announced. Reports indicate that Trump prefers a broader set of tariffs across all countries, rather than targeted measures which were previously reported.
“Tariffs create uncertainty, which is negative for trade and investment. If the current regime is seen as creating an uncertain environment for investments, we could see US markets remaining under pressure.”
George Lagarias, chief economist at Forvis Mazars, said: “What the Trump administration has shown us so far is that you should not expect a consistent approach.”
Morgan Stanley argued that Liberation Day might do little to ease the uncertainty. It could end up being merely a “stepping stone for further negotiations” instead of a big “clearing event” for the market, according to Michael Wilson, a strategist at the US bank. “This means policy uncertainty and growth risks are likely to persist — it’s a question of to what degree.”
On Wall Street, US technology stocks, in particular, bore the brunt of another sell-off. Tesla, for example, down 1.7 per cent on the day, fell 11.5 per cent in March, while Nvidia, the poster child for chip designers, shed 1.2 per cent in the session and was more than 13 per cent lower on the month.
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By the close, the tech-heavy Nasdaq was in correction territory, having fallen more than 10 per cent from its most recent record high in December. The index shed 0.1 per cent on the day and experienced a monthly drop of 8.2 per cent, its worst since December 2022. The more broadly based S&P 500 managed a modest gain on the day but finished March 5.8 per cent lower.
