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On Sunday, US stock-index futures experienced a significant drop after the Trump administration communicated that extensive tariffs would remain, despite concerns about a potential global economic recession. Futures linked to the blue-chip S&P 500 decreased by 3.8%, while those for the tech-heavy Nasdaq 100 fell by 4.6%. Early trading in the Asian morning is typically light, which can amplify market volatility.
These declines followed the erasure of over $5 trillion from the S&P 500 on Thursday and Friday, marking the worst week for the index since the pandemic began in 2020. Former President Donald Trump’s decision to disrupt the global trade order by imposing substantial levies on US imports has heightened worries about the global economy’s trajectory. China responded with retaliatory duties of 34% on Friday.
Commodity markets also endured substantial losses in early trading on Sunday night. West Texas Intermediate, the U.S. benchmark, declined by 3.4% to $59.90 per barrel, falling below what most shale producers require to break even. Meanwhile, Brent, the international marker, dropped by 3.1% to $63.53 per barrel. Copper, seen as an indicator of the global economy due to its industrial applications, fell by more than 5% to $4.14 per pound in US trading.
Trump reaffirmed his commitment to the tariffs, stating on Truth Social that they are essential to addressing financial deficits with China, the European Union, and others. He emphasized that tariffs are bringing substantial revenue to the United States and are effectively in place.
When questioned about the market declines, Trump told reporters that sometimes challenging measures are necessary to resolve issues. Treasury Secretary Scott Bessent dismissed the market’s short-term reaction, asserting on NBC that the administration would stay the course with its tariff strategy. Bessent indicated that whether tariffs are negotiable would depend on credible offers from other countries.
Federal Reserve Chair Jay Powell had previously warned that the tariffs could lead to higher inflation and slower economic growth. JPMorgan economists forecasted on Friday that the US economy could contract by 0.3% this year due to the tariffs, contrary to their earlier prediction of a 1.3% growth.
Investors are concerned that stocks may continue to decline until there is an indication that Trump might soften his stance on tariffs. Bill Ackman, an activist investor and former Trump campaign supporter, expressed concerns on X, stating that aggressive tariffs could undermine confidence in the US as a trading partner and investment market. He urged Trump to reconsider on Monday, warning of a potential self-induced economic downturn.
Dec Mullarkey, managing director at SLC Management, remarked on the prevailing uncertainty and suggested that significant policy uncertainty is still ahead. Banks and technology stocks suffered considerable losses as the dollar weakened against major currencies. Investors shifted towards perceived safe-haven assets, leading to a drop in treasury yields and a decline in European and Asian equities markets. Commodities, including copper and oil, fell amid fears of a global trade conflict.
Morgan Stanley reported that Friday witnessed the fifth-largest session of active net reductions by investors since 2010, with equity long-short funds accounting for 80% of the net sales. This marked the fourth instance in 85 years that the S&P 500 fell by over 10% in just two days, similar to events that occurred during the 1987 crash, the 2008 financial crisis, and early 2020, according to Deutsche Bank.