Global stock markets dropped on Monday as investors worried about the health of the U.S. economy and the destabilizing effects of tariffs on business.
Futures for the S&P 500 fell 1.5 percent in premarket trading, suggesting that when the U.S. market officially opens it will extend last week’s losses, which were the steepest in several months.
Stocks in Europe and Asia also fell. An index tracking the eurozone’s largest public companies, which hit a record high last week, dropped 1.2 percent. Hong Kong’s Hang Seng Index fell more than 1.8 percent.
Investors seeking havens continued to opt for the relative safety of bonds, pushing down the 10-year U.S. Treasury yield to 4.23 percent. (Bond prices move inversely to yields.)
In a Fox News interview that aired on Sunday, President Trump refused to rule out the possibility that his policies would cause a recession.
Over the past few weeks, Mr. Trump has threatened, imposed, suspended and resumed tariffs on America’s largest trade partners: Canada, Mexico and China. The dizzying shifts, including last-minute exemptions for some automakers and energy products, have led to heightened uncertainty, unnerving investors.
Economists have turned gloomier on the outlook as they get to grips with Mr. Trump’s seesawing approach to tariffs, which have hamstrung businesses trying to plan new investments and hiring. Cuts to the federal work force and government spending freezes have also been dented consumer sentiment.
Analysts at JPMorgan Chase said in a report that there was a “materially higher risk” of a global recession this year because of “extreme U.S. policies.” They put the probability of such a downturn at 40 percent. Strategists at Goldman Sachs raised the chances of a U.S. recession in the coming year to 20 percent, citing “policy changes as the key risk.”
On Monday, retaliatory tariffs by China on U.S. agricultural products came into effect. On Wednesday, the Trump administration is set to put in place a 25 percent tariff on all steel and aluminum imports. Mr. Trump has also threatened to impose “reciprocal tariffs” on all U.S. imports to match other countries’ tariffs and trading policies next month.
U.S. tech company stocks continued to lead the declines, falling nearly 2 percent in premarket trading on Monday. Tesla’s shares fell more than 3 percent, Nvidia was down 2.5 percent and Amazon and Alphabet both dropped about 2 percent.