Markets tumble ahead of ‘liberation day’ tariffs

Good morning and welcome back to what promises to be an extremely uncertain week for the global economy as a raft of planned US tariffs come into effect on Wednesday on what Donald Trump has hailed “liberation day”. We’ll bring you the latest markets news as the countdown continues. Here’s what else we’re covering today:

• Trump “pissed off” with Putin

• China invests $72bn in its four biggest banks

• The most expensive judicial race in American history

• And Pilita Clark on the WhatsAppification of work

Global stock markets tumbled today in Asia and Europe and are expected to fall heavily on Wall Street when it opens later as investors worry about the impact of Donald Trump’s next round of trade tariffs, which are set to come into force on Wednesday, and any reciprocal action taken by the US’s trading partners.

What are the tariffs Trump is proposing? The details remain unclear with less than 48 hours to go until they come into force. On Air Force One last night Trump said: “You’d start with all countries, so let’s see what happens.” He then singled out Asia for its trade practices. “Take a look at trade with Asia. I wouldn’t say anybody has treated us fairly,” he said. Previously, the US president said he would impose levies on any country the White House deemed to have an unfair trading relationship with the US. This has included the EU, Mexico, Canada and China. Yesterday he also threatened to impose secondary tariffs on any country that buys Russian oil, which includes China and India.

What has been the reaction to Trump’s latest comments? Japan’s domestic benchmark, the Topix, dropped 3.3 per cent while the exporter-oriented Nikkei 225 slid 3.9 per cent. In Taiwan, the Taiex shed 4.2 per cent, while South Korea’s Kospi fell 3 per cent. Hong Kong’s Hang Seng retreated 1.6 per cent. In Europe, the broad-based Stoxx 600 dropped 0.8 per cent while the Dax in Frankfurt, Germany, Europe’s biggest economy, fell 1.1 per cent. US futures contracts suggest a negative open on Wall Street. Nasdaq 100 futures are 1.4 per cent weaker and S&P 500 contracts are down 0.8 per cent. In currency markets, the yen and offshore renminbi strengthened against the dollar while the euro was unchanged. Safe haven assets, meanwhile, rose as investors moved money out of growth stocks and into less volatile areas. Gold surged to a new record of $3,128 a troy ounce, while the yield on the 10-year US Treasury fell 0.06 percentage points to 4.2 per cent. Read more on the market’s reaction to Trump’s latest comments.

And here’s what else we’re keeping tabs on today:

• Myanmar earthquake: About 1,700 people have been killed as international efforts to get aid into the country intensify.

• Marine Le Pen: The French far-right leader has been convicted of embezzling EU funds. The judges in the case will rule later on whether to ban her from standing for office with immediate effect, which could bar her from the 2027 presidential election.

Five more top stories

1. Donald Trump has said he is “pissed off” with Russian President Vladimir Putin for foot-dragging in talks over a ceasefire with Ukraine, in an interview with NBC News yesterday. Trump’s outburst at Moscow is a shift in tone for the US president, who for weeks blamed Volodymyr Zelenskyy, the Ukrainian president, for being reluctant to strike a deal. Here’s more on Trump’s comments on Russia.

• More on the NBC interview: In the same interview, the US president also said he was “not joking” about serving a third term, adding that there were “methods” by which he could bypass the constitutional prohibition on US presidents being elected three times.

2. “Protectionism has returned with force,” Larry Fink wrote in his annual letter to shareholders. The chief executive of the world’s largest asset manager said his conversations with “nearly every client, nearly every leader” underscored the pervasive unease over the state of the global economy. Read more of Fink’s letter.

3. The Trump administration has sent a letter to some large companies in the EU warning them to comply with an executive order banning diversity, equity and inclusion programmes. The letter, sent by the American embassy in Paris and others around the EU, said that Donald Trump’s executive order applied to companies outside the US if they were a supplier or service provider to the American government.

4. Four of China’s biggest banks will raise a combined Rmb520bn ($72bn) through share sales to investors including the Ministry of Finance, as Beijing seeks to shore up its vast banking sector against economic woes. The rare government-directed injections will increase the banks’ core tier one capital — a gauge of equity that regulators use to limit leverage. Read more on Beijing’s latest measures to restore confidence in its economy.

5. Goldman Sachs’ bonuses to chief executive David Solomon and president John Waldron worth $80mn apiece “raise significant concerns” and should be rejected by the bank’s shareholders, advisory firm Glass Lewis has recommended. The report said the duo’s awards were “further exacerbated by their structure”. Here’s more on Glass Lewis’s intervention.

Today’s big read

Elon Musk, the world’s richest man, has ploughed an unprecedented $22mn into Wisconsin’s state supreme court election, making it the most expensive judicial race in American history. The Tesla boss is backing the conservative candidate Brad Schimel in tomorrow’s vote against the Democrats’ Susan Crawford in a race the whole country is watching.

We’re also reading . . . 

• Trump vs Big Law: None of the top 20 US firms have so far backed an effort by Perkins Coie to fight sanctions imposed by the Trump administration.

• Iran: Is the Islamic Republic on a collision course with the west? Andrew England in London and Najmeh Bozorgmehr in Tehran report.

• UBS: Two years on, the Swiss bank’s integration of Credit Suisse is going well. So why is the “deal of the century” starting to sour?

• US immigration: Visitors have suffered hostile treatment at the hands of border guards, including a German tourist who was shackled and jailed for 16 days.

Chart of the day

Sweden and Norway’s currencies have become a favourite way for traders to bet on a European economic revival. The Swedish krona and the Norwegian krone are the best-performing currencies in the G10 group of developed market currencies this year as investors bet on a higher path for interest rates in Scandinavian countries and a tailwind from the major spending push promised by Germany and other big economies.

Take a break from the news . . . 

The pandemic accelerated a rise in the use of messaging apps such as WhatsApp between colleagues — and also bred new levels of informality at work, writes Pilita Clark. The Trump administration’s recent “Signalgate” scandal underscores the consequences of the WhatsAppification of work.