Market turmoil persists due to Trump’s trade war, erasing $10 trillion, sparking recession fears and fluctuating stock prices.

In Short

Donald Trump’s trade war continues to disrupt markets, causing significant declines and fears of a global recession, with losses around $10 trillion in global equities.

Traders are now predicting potential interest rate cuts by the Federal Reserve to address the economic fallout, despite caution from Chair Jerome Powell.

The market turmoil caused by Donald Trump’s trade war persists for a third day, with significant fluctuations in stocks, bonds, and commodities due to recession fears and speculation about potential policy changes.

Following a grim global outlook, markets in Asia and Europe faced severe declines, contributing to a loss of approximately $10 trillion from global equity markets. The S&P 500 exhibited volatility, alternating between gains and losses as hopes rose and diminished concerning a possible delay in tariff increases by the US president. By mid-afternoon, the index showed a slight gain, momentarily halting the steepest drop in US stocks since the pandemic shutdowns of 2020.

VIX Index

Other markets also faced volatility, with traders factoring in a heightened risk of a global recession. Oil prices fell, and the VIX Index, which indicates market fear, surged to levels reminiscent of the pandemic. Treasuries were also affected, with yields on longer-dated bonds increasing; the 10-year yield rose by 16 basis points to 4.15%. This surge underscores concerns that tariffs may harm the economy and exacerbate government financial issues.

In light of these developments, traders have increased predictions that the Federal Reserve might implement up to five quarter-point rate cuts this year to mitigate the economic impacts. This comes despite Chair Jerome Powell’s indication of caution regarding any immediate easing, as a shift in trade policy may lead to renewed inflation pressures.