Introduction: Growth fears grip markets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The Trump Bump has turned into the Trump Slump, as rising fears of a US recession rocked the markets yesterday.
Monday was a dark day on Wall Street, where the S&P 500 fell 2.7%, the Dow Jones dropped 2%, and the tech-heavy Nasdaq dropped 4%, with losses among the major tech companies.
Investors dashed for save-haven assets after the US president refused to rule out that his policies would lead to a recession, or rising prices.
Instead, he told Fox News in an interview aired last weekend that there would be a “period of transition.”…..
The slide means that the jump in asset prices after Trump’s election win last November has been wiped out.
Hopes of a ‘Trump put’ have also taken a knock. This is the hope that the US president might take action to prop up share prices if the markets suffered a sharp decline.
[a put option gives you the opportunity to buy an asset at a particular price].
Michael Brown, senior research strategist at Pepperstone, explains:
I think it’s pretty clear, at this stage, that the idea of a ‘Trump put’ is stone dead – or, at least, that the strike price of said put is much, much lower than had previously been envisaged. Trump’s weekend refusal to rule out a recession this year is just the latest evidence of this, coupled with both Treasury Secretary Bessent, and Commerce Secretary Lutnick, having both ‘rolled the pitch’ for a slowdown in recent weeks.
The Admin are, for now, doubling down on the idea of ‘short term pain, for long term gain’, in the hope that macro headwinds can be blamed on the Biden Admin, and that Trump & Co will be able to claim credit for the economic, and market, turnaround that would likely follow. While I see how this might be politically expedient, juicing the economy just in time for the midterms, it’s rather economically incoherent, particularly for an Oval Office which claims to be more focused on Main Street, than on Wall Street.
After its worst day of the year, Wall Street is expected to open a little higher when trading resumes at 1.30pm GMT.
That might bring some calm to Europe’s markets, after a choppy session in Asia-Pacific markets overnight.
Investors are also poised for the latest US economic data, covering small business confidence and job vacancies, for a healthcheck on American growth.
The agenda
Key events
Nikkei closes in the red
Japan’s stock market has fallen today, although it’s recovered somewhat from an early tumble.
The Nikkei index has closed down 0.65% today, having earlier hit a six-month low as US recession fears spooked traders in Tokyo. At one stage, it was down 1.7%.
The Japanese yen has hit a five-month high against the US dollar, as investors look for a safe place for their money.
With fears of a tariff-driven slowdown in US economic growth rattling the dollar, and US stocks, the yen hit ¥146.55 per dollar, its strongest since last October.
The dollar is down more than 7% from a six-month high – ¥158.8 – it hit in January against the yen, suggesting the US currrency is losing some of its safe-haven appeal.
Chris Weston, head of research at broker Pepperstone, explains:
“Historically, the dollar outperforms when we get a solid rise in volatility, but when the U.S. economy and U.S. equitymarket are the central point of concern, this is now limiting the attractiveness of the dollar.”
US dollar near four-month low
Fears over the economic impact of the Trump White House have hurt the US dollar in recent sessions.
This morning, the dollar is down 0.2% against a basket of major currencies, close to the four-month low it hit last Friday.
The greenback, like the US stock market, has lost all the gains it enjoyed after Trump’s election win.
Initially, investors had bet that Trumpian policies such as tariffs and a clampdown on immigration would be inflationary, leading to higher US interest rates and thus a stronger currrency.
Now, though, attention has turned to risks that growth will be sapped, requiring lower interest rates to stimulate the economy…..
Introduction: Growth fears grip markets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The Trump Bump has turned into the Trump Slump, as rising fears of a US recession rocked the markets yesterday.
Monday was a dark day on Wall Street, where the S&P 500 fell 2.7%, the Dow Jones dropped 2%, and the tech-heavy Nasdaq dropped 4%, with losses among the major tech companies.
Investors dashed for save-haven assets after the US president refused to rule out that his policies would lead to a recession, or rising prices.
Instead, he told Fox News in an interview aired last weekend that there would be a “period of transition.”…..
The slide means that the jump in asset prices after Trump’s election win last November has been wiped out.
Hopes of a ‘Trump put’ have also taken a knock. This is the hope that the US president might take action to prop up share prices if the markets suffered a sharp decline.
[a put option gives you the opportunity to buy an asset at a particular price].
Michael Brown, senior research strategist at Pepperstone, explains:
I think it’s pretty clear, at this stage, that the idea of a ‘Trump put’ is stone dead – or, at least, that the strike price of said put is much, much lower than had previously been envisaged. Trump’s weekend refusal to rule out a recession this year is just the latest evidence of this, coupled with both Treasury Secretary Bessent, and Commerce Secretary Lutnick, having both ‘rolled the pitch’ for a slowdown in recent weeks.
The Admin are, for now, doubling down on the idea of ‘short term pain, for long term gain’, in the hope that macro headwinds can be blamed on the Biden Admin, and that Trump & Co will be able to claim credit for the economic, and market, turnaround that would likely follow. While I see how this might be politically expedient, juicing the economy just in time for the midterms, it’s rather economically incoherent, particularly for an Oval Office which claims to be more focused on Main Street, than on Wall Street.
After its worst day of the year, Wall Street is expected to open a little higher when trading resumes at 1.30pm GMT.
That might bring some calm to Europe’s markets, after a choppy session in Asia-Pacific markets overnight.
Investors are also poised for the latest US economic data, covering small business confidence and job vacancies, for a healthcheck on American growth.
