(Reuters) -Asian share markets and U.S. stock futures tumbled on Monday as fears of a global trade war led investors to ramp up bets on the risk of recession and a U.S. rate cut as early as May. [MKTS/GLOB]
Monday's rout extends a two-day selloff that wiped trillions of dollars from equity values after U.S. President Donald Trump's administration announced sweeping tariffs last week.
COMMENTS:
BEN BENNETT, HEAD OF INVESTMENT STRATEGY FOR ASIA, LGIM, HONG KONG
"Our multi asset portfolio positioning was relatively defensive entering last week – underweight risk, mostly via credit and overweight interest rate duration. At the margin we’re using the sell-off to reduce this a bit, so adding some equity/credit risk and reducing duration. But markets look pretty murky still, so we’re happy to remain defensive in general."
TONY SYCAMORE, MARKET ANALYST, IG, SYDNEY
"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. 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 U.S. dollar return to being the kingmaker except against the yen."
KAREN JORRITSMA, HEAD OF EQUITIES, AUSTRALIA, RBC CAPITAL, SYDNEY
"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.
MATTHEW RUBIN, CHIEF INVESTMENT OFFICER, CARY STREET PARTNERS, NEW YORK
"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."
JASON WONG, SENIOR MARKET STRATEGIST, BNZ, WELLINGTON
"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."
SIMON WARD, HEAD OF DEBT CAPITAL MARKETS, AUSTRALASIA, MIZUHO SECURITIES ASIA, SYDNEY
"It's definitely pretty much everywhere, it's not just the equity market. We've seen U.S. Treasuries rally, as they should, we've seen credit spreads gap wider materially and we're also hearing various fund flows going the other way as well, as people try to get into cash or other commodities.
"I think a lot of issuers who have mandates out publicly already are in pause mode."
JOHN MILROY, PRIVATE WEALTH ADVISOR, ORD MINNETT, SYDNEY
"All the conversations I have had with clients are more about when do we buy something rather than sell. This is leveraged selling that has no choice. I have fear for some of those private credit shops as prices and credit spreads swing wildly.
"Key in the short term is if China pulls the pin on a big stimulus package directed at consumers. The broader market was already expensive, always had to be a reckoning. Here it is. Next comes the earnings changes."
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT
"One of the problems is that people were looking for some kind of comment over the weekend from somebody in the administration that would indicate some possible negotiation or maybe a change in the tariffs. But they seemed to dig in their heels so we're down more than 4%."
"Some of it might be jockeying because of margin calls or people trying to get ahead of margin calls, or pre-positioning or selling into the news for what they think is going to happen tomorrow morning. With Friday being such a big down day, you'd imagine somebody's getting a margin call somewhere."
"People are real nervous about the uncertainty this brings, the potential decline in earnings, the fact the Federal Reserve has said they are going to wait and stay on hold until they get more clarity. If the Fed isn't coming to the rescue, then who else is going to come to the rescue?"
"People are afraid the worst is yet to come. They're worried about a market crash. They're worried about what follows, a recession here domestically and then globally, leading to a possible depression."
DEAN FERGIE, DIRECTOR, CYAN INVESTMENT MANAGEMENT, MELBOURNE
"I expect a lot of panic selling this morning but over the coming days some level of rationality should prevail and we’ll see some buying support come in. The sectors to watch will be the financials/fund managers impacted by global market weakness, and the global discretionary stocks."
ANGELO KOURKAFAS, SENIOR INVESTMENT STRATEGIST, EDWARD JONES, ST LOUIS
"Fear is what continues to drive market action since the April 2nd tariff announcement. I think many investors are fearing the worst-case scenario of a prolonged trade war. Until we get an off-ramp and some indication that we potentially are pivoting to cutting deals to lower tariffs, that sentiment will remain fragile."
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
"The lack of any policy response from the Trump administration on the market sell-off is adding to the uncertainty, reinforcing the idea that the current trajectory may remain unchanged in the near term. Unless we see a clear pivot from policymakers, volatility is likely to stay elevated, and the path of least resistance for risk assets remains to the downside."
SEAN CALLOW, SENIOR FX ANALYST, ITC MARKETS, SYDNEY
"It will be all hands on deck for Asian policymakers today, but they know that they have limited control over market panic. The only real circuit breaker is President Trump's iPhone and he is showing little sign that the market selloff is bothering him enough to reconsider a policy stance he has believed in for decades."
DAVID SEIF, CHIEF ECONOMIST FOR DEVELOPED MARKETS, NOMURA, NEW YORK:
"In market selloffs like this, panic and forced selling via margin calls can dominate for a while. That’s not to say that it isn’t based on a very real negative event, which is these tariffs. But I think the ensuing selloff can take on a life of its own. Bottom line, I’m not sure when stocks will find a bottom, but I don’t think stocks are returning to their pre-April 2 levels anytime soon.”
ANINDA MITRA, HEAD OF ASIA MACRO STRATEGY, BNY INVESTMENT INSTITUTE, SINGAPORE
"The market may be justifiably concerned but it appears to be pricing in the worst of an adverse trajectory of trade policy shifts in the U.S. In this context, any (eventual) negotiated, and downward adjustments in bilateral tariffs or a bigger-than-expected U.S. fiscal offset or a quicker-than-expected Fed policy pivot may counter some of the headwinds.
But until there is greater visibility in bilateral negotiations and tariff rollbacks, and other macro policy support, market volatility may stay elevated."
(Reporting by the finance and markets team; Compiled by Megan Davies and Vidya Ranganathan; Editing by Himani Sarkar and Sonali Paul)
