Black Monday Redux? Global Markets Tank As Trump Tariff Fears Grip Investors, Goldman Ups Recession Odds

U.S. President Donald Trump's escalating trade war continued to roil global markets on Monday as fears of retaliatory policies from other countries spooked investors and drained risk appetite.

Asian markets were the first to react following Wall Street's worst week since the onset of the COVID-19 pandemic.

Japan's Nikkei plunged 7.8% to its lowest close since October 2023; Hong Kong's Hang Seng tumbled over 13% — reportedly the worst drop since the 2008 global financial crisis; and China's CSI 300 dropped about 7%.

Singapore's Straits Times Index lost 7.6%, South Korea's Kospi over 5.5%, and India's Nifty 50 fared slightly better with a nearly 4% drop as of 5:20 a.m. ET.

European markets also opened sharply lower, with Germany's DAX down 6.9% and the U.K.'s FTSE off 4.6%.

China has already announced retaliatory tariffs, while the EU is still finalizing its response, which is expected to take effect this month. 

The uncertainty is fueling a global rush to bonds. Germany's 10-year yield reportedly fell 10.2 basis points, and the U.K.'s gilt yield dropped 7.3 bps. 

Oil prices are sliding too: WTI crude was last down 4.4% at $59.15, its lowest level since April 2021. 

Gold is hovering near record highs at $3,018.40 per ounce but is not seeing a notable haven bid today. 

The U.S. dollar also weakened slightly, down 0.20% to 102.330, against a basket of major peers.

Goldman Sachs slashed its 2025 U.S. GDP growth forecast to 0.5% from 1.0%, warning that Trump's sweeping tariffs could have a sharp economic impact. 

Chief Economist Jan Hatzius said the revised baseline factors in a 15-point jump in the effective tariff rate — even after accounting for potential rollbacks.

The bank also raised its 12-month recession risk to 45% from 35%, saying that if a downturn hits, the Federal Reserve could cut rates by 200 basis points over the next year. 

Even without a recession, Goldman now expects the Fed to begin a series of three rate cuts starting in June, earlier than its previous July projection.

Echoing the sentiment, Evercore ISI strategist Julian Emanuel trimmed the firm's 2025 year-end S&P 500 target to 5,600 from 6,800. 

Emanuel compared the tariff shock to a modern-day Smoot-Hawley Act — widely believed to have exacerbated the Great Depression in 1930 — warning that using a "sledgehammer" approach to remake decades of economic and geopolitical systems was bound to jolt markets. 

Major U.S. stock market futures were sharply lower heading into the fresh trading week, with the benchmark S&P 500 expected to open in bear territory and several commentators warning of a repeat of the 1987 "Black Monday" crash. 

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