Heading into this year, US stocks had been at record highs, with some strategists questioning how much room was to left to rally. Analysts had expected Trump to usher in a pro-business boom, enabling the stock market to continue its historic run.
However, Trump’s commitment to an economic agenda that prioritizes tariffs has left some investors perplexed. Trump has not given markets the same attention as he did in his first term, while investors have had to reckon with other factors on top of tariffs, such as debates over the value of the artificial intelligence boom. The tech-heavy Nasdaq is down almost 12% year this and on track for its worst quarter since June 2022 and worst start to a year since 2020.
As Wednesday approaches, investors are still uncertain about the extent of the tariffs — and businesses and consumers are bracing for impact. Trump on Saturday told NBC News that he “couldn’t care less” if automakers raise prices because of tariffs.
“The administration cites fairer trade relationships as the goal, with reciprocity the governing principle for implementing tariffs. But beyond that, little is known about what this policy will entail,” analysts at Morgan Stanley said in a Monday note.
“This isn’t exactly reassuring to investors we talk to, who are perplexed by the dynamic of tariff announcements, negotiations, delays and shifting levels of implementation for Mexico, Canada, China and some key products,” the analysts said.
US government bonds initially rallied Monday morning as investors flocked to safe haven assets. The yield on the 10-year Treasury note fell to an intraday low of 4.2% as investors snapped up bonds.
“The comments leading up to this are still a lot of mixed messages and so the uncertainty level is still high, and nobody really knows what to expect,” said Thomas Martin, a senior portfolio manager at Globalt Investments.
“We’re going to get an announcement and and we’re still not going to have clarity. And I think that’s the main thing we’re going to be living with for a while,” Martin said.
Global markets have similarly been shaken by Trump’s tariffs. In Japan, the benchmark Nikkei 225 tumbled more than 4% on Monday and closed in correction territory, down 10% for the first quarter. Taiwan’s benchmark index also tumbled 4.2% and closed down 10% for this quarter.
In Europe, the STOXX 600 index was down 1.5%. Germany’s DAX index fell 1.33%.
Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, surged higher Monday morning. “Extreme fear” was the sentiment driving markets on Monday, according to CNN’s Fear and Greed Index. Markets in March were driven by “extreme fear” on 16 trading days, the most in any month over the past year.
“Its all about the tariff uncertainty and how much tariffs and counter measures will be announced,” said Mohit Kumar, chief economist and strategist for Europe at Jefferies, in a note Monday.
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