Global stocks slide on tariff turmoil, recession fear mounts

World stocks plunged on Monday as US President Donald Trump showed no sign of backing away from his sweeping tariff plans, and investors bet the mounting risk of recession could see the Federal Reserve cutting interest rates as early as May.

Monday's rout extends a two-day selloff that wiped trillions of dollars from equity values after US President Donald Trump's administration announced sweeping tariffs last week.

Japan's blue-chip Nikkei slid almost 8 per cent, European shares were down 6 per cent, US stock futures pointed to a sharp selloff on Wall Street later on and the VIX stocks volatility gauge jumped to its highest since August.

Tim Graf, Head Of Emea Macro Strategy, State Street, London

"We're in the territory where this will be a named event when people write about things in 10 or 20 years time. The easy driver is what was announced last week and the scale of it being far worse, but there are a couple of things that are exacerbating it."

"Firstly things become reflexive - derisking leads to derisking because you have volatility triggers that are hit. And even though individual actors in markets think they are doing the rational thing, when they all do the same thing at the same time, it becomes a bit irrational on the surface, a sort of tragedy of the commons."

"And secondly there is an intransigence element that will come to the fore because these guys (U.S. policymakers) don't sound like they are going to change their minds."

Jane Foley, Head Of Fx Strategy, Rabobank, London

"The euro has certainly performed really quite well over the last couple of days since we've heard about the tariffs. And that perhaps is exceptional. Maybe that's related to the Eurozone current account position, or maybe it's just related to investors still moving out of US assets and still not quite sure where they should be moving their money to.... But at least normality has continued in so far as most currencies now are behaving the way you would expect them to behave, with the Aussie and New Zealand dollars selling off, and the Swiss franc and the yen gaining ground."

Francois Savary, Chief Investment Officer, Genvil Wealth Management, Geneva

"The problem is that there is a necessity for the U.S. government to give more clarity. There is capitulation in the market and it is hard to determine to where there is a floor.

The dollar weakening is a sign of stress, junk bond spreads and CDS are exploding, we have real pressure there. The VIX is currently at 60 which is quite unique -- the last time we saw the VIX at these levels was August. Passive investors are selling because they are in full panic mode. I am most concerned about the stubbornness of the U.S. administration. We need some stabilization."

"The market is pricing in the risk of recession looming."

Richard Flax, Chief Investment Officer At Moneyfarm

"I guess there was some hope over the weekend that maybe we would see this as part of the start of a negotiation, but the messages that we've so far seen suggest that the President Trump is comfortable with the market reaction and that he's going to continue on this course. So you might guess that there will be some negotiations over time about tariff levels and about kind of the reaction to this, but the timing for that is unclear and for now the tariffs come into effect, either have done or in the next few days, and the market is reacting to the potential concerns around weaker growth and higher inflation."

Ben Bennett, Head Of Investment Strategy For Asia, Lgim, Hong Kong

"Our multi asset portfolio positioning was relatively defensive entering last week – underweight risk, mostly via credit and overweight interest rate duration. At the margin we’re using the sell-off to reduce this a bit, so adding some equity/credit risk and reducing duration. But markets look pretty murky still, so we’re happy to remain defensive in general."

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 US dollar return to being the kingmaker except against the yen."

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.

Matthew Rubin, Chief Investment Officer, Cary Street Partners, New York

"One of the things that clearly clients have more exposure to today is private markets ... there's a little bit more control there in the private markets of the portfolio because you take out some of the daily trading and the daily volatility. I think that's important. I wouldn't call that a refuge though."

"This didn't come out of some sort of exogenous risk that was uncovered. This is being brought on because of the tariffs. And none of us know when we'll see more clarity or resolution, whether it be further negotiation and whether this is really about negotiation or whether this is about a fundamental change to try to reshape the manufacturing economy here in the US."

Jason Wong, Senior Market Strategist, Bnz, Wellington

"Trump's not blinking yet, and his entourage aren't blinking over the weekend ... but there comes a point, when they do capitulate, and you're trying to play the market, as to when that might happen - we need some sort of Trump team response, before the bleeding is going to stop."

Simon Ward, Head Of Debt Capital Markets, Australasia, Mizuho Securities Asia, Sydney

"It's definitely pretty much everywhere, it's not just the equity market. We've seen US Treasuries rally, as they should, we've seen credit spreads gap wider materially and we're also hearing various fund flows going the other way as well, as people try to get into cash or other commodities.

"I think a lot of issuers who have mandates out publicly already are in pause mode."

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.

"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

"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."

Dean Fergie, Director, Cyan Investment Management, Melbourne

"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."

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."