Stock markets edge up but Trump tariff fears dampen mood ~ EconomyLens.com

Hong Kong (AFP) – Asian and European markets squeezed out gains Tuesday, clawing back some of their recent hefty losses. However, sluggish sentiment and increased uncertainty saw gold hit another record high as Donald Trump prepares to unveil sweeping tariffs. Investors have been rushing to position themselves for the US president’s “Liberation Day” on Wednesday, when he warned he will impose levies on “all countries” for what he has said is years of them ripping off Americans.

Trump said Monday he would be “very kind” when he unveils the tariffs, but with little detail on who will be hit with what, trading floors are awash with uncertainty, hammering equities across the board and stoking recession fears. Trump’s threat last week to impose 25 percent tariffs on car and parts imports added to the dour mood, and some warn the volatility will likely continue as governments react to the measures by either appeasing the Republicans or retaliating in kind.

On Tuesday, Vietnam said it would slash duties on a range of goods including cars, liquefied gas, and some agricultural products, while the European Union and Taiwan indicated they had plans to deal with the announcement. “Some on Wall Street are already talking about how ‘April 2’ may very well be lighter-than-feared, producing a snap-back rally in risk assets,” said Jose Torres, a senior economist at Interactive Brokers. “But others worry that this economy can’t handle a stress test of this magnitude and point to households increasingly unable to sustain expenditure patterns in light of mounting headwinds.”

After a run of big losses across markets, equities staged a mild recovery Tuesday. Tokyo, which has borne the brunt of the pain due to hefty selling of car giants including Toyota and Honda, edged up along with Hong Kong, Shanghai, Sydney, Seoul, Taipei, Bangkok, Singapore, and Wellington. Mumbai dipped. London, Paris and Frankfurt rose in the morning. But the rebound was as fragile as that seen in New York, where the S&P 500 rose on Monday but closed its worst quarter since 2022.

With uncertainty reigning, gold—a go-to safe haven in times of turmoil—chalked up another record, hitting $3,149.00. That came after Wall Street’s so-called VIX “fear index” rose for a fourth successive day. “We continue to think that markets including Asia forex are underpricing the magnitude of these tariffs, and our North Star is for Trump to be more aggressive than many think possible in a significant structural change to the post-World War II global order, beyond the day-to-day policy whiplash and uncertainty,” said Michael Wan at MUFG.