Asian and European stock markets posted modest gains on Tuesday, recovering some of their recent heavy losses. However, investor sentiment remained cautious as gold surged to a new record high ahead of former U.S. President Donald Trump’s anticipated announcement of sweeping trade tariffs.
Market participants have been repositioning ahead of what Trump has termed “Liberation Day” on Wednesday, when he is expected to impose tariffs on “all countries” in response to what he describes as years of unfair trade practices against the United States.
Speaking on Monday, Trump assured he would be “very kind” in rolling out the tariffs. However, with few specifics on which countries or sectors will be affected, uncertainty continues to weigh on trading floors, rattling equities and raising fears of a potential economic downturn.
Last week’s threat of a 25 percent tariff on car and auto part imports exacerbated market volatility, with analysts warning of further turbulence as global economies respond—either by seeking concessions or retaliating with countermeasures.
In response to the trade climate, Vietnam announced on Tuesday that it would reduce duties on various goods, including cars, liquefied gas, and select agricultural products.
“Some on Wall Street anticipate that April 2 could be less severe than feared, potentially triggering a rebound in risk assets,” noted Jose Torres, senior economist at Interactive Brokers.
“But others remain concerned that the economy may not withstand a stress test of this magnitude, particularly as households struggle to maintain spending amid mounting economic pressures.”
Following a series of steep losses, equities saw a mild recovery on Tuesday. Tokyo, which had been hit hard by aggressive selling in major automakers such as Toyota and Honda, recorded gains alongside markets in Hong Kong, Shanghai, Sydney, Seoul, Taipei, Bangkok, Singapore, and Wellington. Mumbai, however, dipped.
In Europe, London, Paris, and Frankfurt opened higher, mirroring the fragile rebound seen on Wall Street, where the S&P 500 managed to rise on Monday but still concluded its worst quarter since 2022.
Amid ongoing market uncertainty, gold—a traditional safe-haven asset—reached a new all-time high of $3,149.00 per ounce, reflecting investor caution. This surge followed a fourth consecutive rise in Wall Street’s VIX “fear index.”
“We believe markets, including Asian forex, are underestimating the scale of these tariffs,” said Michael Wan of MUFG. “Our outlook suggests Trump may adopt a more aggressive stance than currently anticipated, ushering in a significant structural shift in the post-World War II global economic order, beyond the day-to-day market fluctuations.”
AFP
