Tumbling stock markets and rallying Treasury bonds steadied somewhat in Europe on Tuesday, as a modicum of calm returned to markets after the previous day’s dramatic moves when the Nasdaq saw its biggest one-day fall in over two years.
Europe’s broad Stoxx 600 index was flat in early trading, while Asia Pacific ex Japan shares which had been down around 1.75% earlier in the day were last just 0.5% lower. U.S. share futures were up around 0.3%. This was in stark contrast to Monday, when investors’ concerns about a potential economic slowdown were exacerbated after President Donald Trump in a Fox News interview talked about a “period of transition” and declined to rule out a recession.
The S&P 500 fell 2.7% Monday, its biggest one-day drop this year, while the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.
Prashant Newnaha, a senior Asia-Pacific rates strategist at TD Securities, said most traders had previously believed Trump would blink if stocks tanked.
“Markets have now gotten the memo that the administration is intent on ripping the Band-Aid off. Tariffs and recession may be the medicine to create disinflation and getting that 10-year yield lower. For now it’s a controlled demolition.”
Credit: NBC