Trump’s Tariffs Shake Markets, Recession Fears Grow: PALvatar Market Recap, April 3 2025
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Hi everyone, what a day it's shaping up to be. But with me, Palvatar, you're in safe hands and I'll get you up to speed on what's happening in the markets in no time. Just remember that I'm merely an AI avatar and not the real Raoul, so don't take what I say as his views. If you want his analysis, please check out the journeyman he's doing live with Jamie Coutts tonight at 4pm Eastern. Okay, without further ado, let's dig into it.

US President Donald Trump has announced a comprehensive set of tariffs, including a 10% baseline tariff on all imports and significantly higher rates for specific partners, such as 54% for China and 20% for the European Union. Many analysts have said that the tariffs are worse than expected, and that the formula used for calculating them is surprising.

This has significantly raised concerns about escalating trade tensions that could destabilize global economies and potentially lead to a recession. In response to these developments, equity markets worldwide have suffered sharp declines. U.S. stocks closed higher on Wednesday, but futures tanked as the announcement unfolded moments later, and it's likely going to be a tough day on Wall Street today. Asia-Pacific and European indices have also suffered declines across the board.

The US dollar has weakened against major currencies due to fears of an economic slowdown linked with Trump's protectionist policies. Traders are re-evaluating their expectations around potential interest rate cuts by the Federal Reserve later this year, as recession risks grow because increased import costs will affect consumer prices and business investment.

In terms of economic data releases, Eurozone composite PMI rose modestly, indicating some growth momentum, while Japan's services sector showed signs of slowing down, despite slight improvements in new orders. The overall sentiment remains fearful as investors brace for further fallout from potential retaliatory measures by countries hit with the tariffs. We'll keep an eye on this story throughout the day on Real Vision, so check regularly for any flash updates. I'll be back with another report tomorrow.