— AFP
NEW YORK: Asian share markets and US stock futures tumbled yesterday as fears of a global trade war led investors to ramp up bets on the risk of recession and a US rate cut as early as May.
Yesterday’s rout extends a two-day sell-off that wiped trillions of dollars from equity values after US President Donald Trump’s administration announced sweeping tariffs last week.
“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.
I think he felt he had control. But he hasn’t – he’s lost control, said Karen Jorritsma, the head of equities Australia for RBC Capital, Sydney.
“It’s gone too far. The Chinese have got involved ... It’s like when you start a fight at the Christmas family party and then suddenly everyone’s fighting and then you go, hang on a second guys, I just did this for a bit of fun.
Well, the fun’s over and now there’s real world ramifications, unfortunately. It can go too far,.” she continued
“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,” said Tony Sycamore, a market analyst at IG in Sydney.
“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,” he said.
Meanwhile, Matthew Rubin, chief investment officer at Cary Street Partners New York said, “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,” he said.
“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,” said senior market strategist at BNZ Wellington, Jason Wong. — Reuters
