LONDON, April 3 (Reuters): World stocks, the dollar and oil all tumbled on Thursday as Donald Trump's drastic new US trade tariffs drove widespread fears of a global recession and left investors seeking safe-haven bonds and the yen.
A new baseline 10 per cent tariff on imported goods plus some eye-watering additional 'reciprocal' tariffs on dozens of countries Trump said had unfair trade barriers, left traders clearly rattled by their severity.
In Europe, where the 27-country EU bloc now faces a 20 per cent reciprocal levy, bourses lurched between 1.3 per cent and 2 per cent lower as Brussels and other capitals voiced uproar.
Wall Street futures were down 3 per cent ahead of what was expected to be a turbulent US restart later. The dollar's 2 per cent plunge had it heading for its worst daily drubbing since November 2022.
In Asia, where some of the harshest tariffs had been focused, Tokyo had dropped 2.7 per cent to leave it facing its worst week in nearly two years.
Analysts at JPMorgan said the tariffs were "significantly higher than the realistic worst-case scenario" that had been envisaged.
Credit rating agency Fitch warned they were a "game-changer" for both the US and global economy, while Deutsche Bank called them a "once in a lifetime" moment that could easily knock between 1 per cent-1.5 per cent off US growth this year.
"Many countries will likely end up in a recession," Fitch's Olu Sonola said. "You can throw most forecasts out the door if this tariff rate stays on for an extended period of time."
The scramble for ultra-safe government bonds that provide a guaranteed income drove US Treasury yields down towards 4 per cent and Germany's 10-year yield , the European benchmark borrowing rate, went 8.5 basis points lower to 2.64 per cent.
The sweeping new tariffs will raise effective import taxes in the world's largest economy to the highest levels in a century. If they do trigger recessions, central banks around the world are likely to slash interest rates which benefits bonds.
S&P 500 and Nasdaq futures were both down over 3 per cent ahead of what was expected to be a treacherous Wall Street restart.
Apple was marked down 6.5 per cent, hit by the tariffs on China - the base for much of Apple's manufacturing. Amazon.com was down over 5 per cent, Microsoft 1.8 per cent while AI poster child Nvidia was down 3.5 per cent.
It comes after trillions off dollars have already wiped off the 'Magnificent Seven' tech giants this year as worries have mounted.
Trump's levies had impacted Asia particularly hard.
China was hit with a 34 per cent tariff, Japan got 24 per cent, South Korea 25 per cent and Vietnam 46 per cent. Vietnamese stocks slumped 6.7 per cent in response and Nike, Adidas and Puma who all source heavily from Vietnam and other Asian producers were pummelled as much as 10 per cent.
The risk sensitive Australian dollar also fell as it was hit as well and with China, Canada and Europe all promising countermeasures, investors were selling exposure to global growth.
Oil, a proxy for economic activity, dropped as much 4 per cent in London to push Brent back below $72 a barrel and firmly on course for its worst day of the year so far.
Gold hit a record high above $3,160 an ounce before running out of steam while Japan's yen jumped more than 1.5 per cent to 147.01 per dollar as foreign exchange traders looked for safety outside the US dollar.
The Swiss franc , another traditional safety play touched its strongest level in four months as the euro surged 2 per cent to $1.10.
"Eye-watering tariffs on a country-by-country basis scream 'negotiation tactic', which will keep markets on edge for the foreseeable future," said Adam Hetts, global head of multi-asset and portfolio manager at Janus Henderson Investors.
China, held its currency relatively steady, containing
the yuan's drop to about 0.4 per cent despite total
tariffs of above 50 per cent on Chinese exports and the hit to Vietnam seen as shutting down a popular work-around route.
China's big domestic economy and the hope of support from Beijing limited losses in Hong Kong stocks to about 1.5 per cent and in Shanghai to around 0.5 per cent.
"The key focus over the next few days should clearly be China," said Deutsche Bank strategist George Saravelos.
"How willing will China be to wait for trade negotiations ... or to absorb this?," he said. "Or will it try to 'export' the shock ... via a devaluation of the yuan."
