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US equity index futures fell sharply on Sunday after the Trump administration showed that tariffs that will be wiped out would be maintained properly despite the potential to cause a global economic recession.
Contracts tracking the Blue-chip S&P 500 have dropped by 3.8%, while contracts for the high-tech Nasdaq 100 have slided 4.6%. Trading activities are usually lighter early in the mornings of Asia and can exacerbate volatility.
The decline comes after it was erased from the S&P 500 at the end of its worst week on Thursday and Friday since the start of the 2020 pandemic. Donald Trump’s move to reform the global trade order by implementing a massive tax on US imports has deepened concerns about the trajectory of the world economy. China announced its retaliation mission of 34% on Friday.
Also, in early Sunday night trading, the US benchmark West Texas mid-level, the goods suffered a major loss. International Marker Brent fell 3.1% to $63.53.
Copper, widely seen as a proxy for the global economy for industrial use, fell more than 5% in US trade to $4.14 per pound.
Over the weekend, Treasury Secretary of Trump, Scott Bescent, dismissed the “short-term” market response to the president’s aggressive tariffs, telling NBC that the White House “holds the course.”
“Our trading partners are using us,” Bescent said Sunday. Asked if Trump’s tariffs were negotiable, he said: “We’ll have to see what (other) countries have to offer and whether they can be believed.”
His comments followed a warning from Federal Reserve Chairman Jay Powell that tariffs “have high inflation and slow growth.”
JP Morgan economist said Friday that he hopes the world’s largest economy will contract 0.3% this year “under tariff weight.” They previously predicted a US growth rate of 1.3%.
Some investors are worried that the stock will continue to slip until Trump shows that his tariffs are not offensive.
Bill Ackman, an activist investor who voiced Trump during the campaign, posted on X that there is a risk that “large, disproportionate tariffs will destroy confidence as trading partners, as business locations and as a market for investing capital.”
He urged Trump to call a “timeout” on Monday.
“Or alternatively, we are heading towards a self-induced economic core winter. We should start diving,” he writes.
“Uncertainty is a big term for now and there’s not even a peak policy uncertainty,” said Dec Mullarkey, managing director of SLC Management.
Bank and technology stocks were hit hardest last week as the dollar sank against other major currencies, with Treasury yields moving backwards to prices falling as investors rushed to safe haven assets. Stock markets in Europe and Asia also fell sharply, but commodities containing copper and oil fell into fear of a world trade war.
According to Morgan Stanley, Friday marked the fifth largest “active net reduction” session by investors since 2010, with the equity long short fund responsible for 80% of net sales.
According to Deutsche Bank, the 10% or more decline on Thursday and Friday was the fourth, the fourth, after the crash in 1987 in 2008, early 2020 crash in 2008, and 85 years in early 2020 in 2008.
