Global Markets Follow US Lower As Global Recession Fears Rise — They’ll Likely Bounce Back First

As most Americans went to bed Sunday night, stock markets around the world were roiled at the open — with circuit breakers and volatility halts tripped across Asia and Europe. And by the time the markets closed on Monday evening, both developed and emerging markets — as measured by Vanguard’sVEA

andVWO

ETF — were down 2.2% and 4%. On a country-by-country basis, things looked much worse.

• The losses were worst in Asia — with Hong Kong’s Hang Seng index (-13.8%), Taiwan’s SGX FTSE (-13%), and China’s A50 (-7.7%) indexes facing the steepest losses, a product of new Trump tariff threats.
• Not far behind, losses across Europe’s STOXX600 (-4%) were measured — with Italy’s MIB (-4.5%), Switzerland’s SMI (-4.2%), and Spain’s IBEX 35 (-4%) leading Europe lower.

What comes next? While losses in US markets moderated on Monday, President Trump’s wishy-washy attitude on the staying power of tariffs is causing investors to wonder — is this a one-month, one-year, or one-decade sort of situation? Only saying that he’s open to deals or that tariffs could stay “forever,” Trump’s comments have continued to roil markets. And given the uncertainty around the tariff tiff, many investors are unsure whether or not it makes sense to try to ‘catch the falling knife’ of equity valuations. If it is at all, developed markets like Europe — which have recently indicated a desire to relax fiscal spending caps — might be a better place to park cash than the increasingly unstable and unpredictable US market.