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Stocks struggle after global selloff on Trump's tariffs

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Investors fear U.S. recession, ramp up bets on Fed rate

cuts

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Safe-haven assets rise; gold near record high, dollar

weakens

By Rae Wee

SINGAPORE, April 4 (Reuters) - Stocks limped to the end

of the week on Friday, the dollar was set for its worst week in

a month while gold flirted with a record peak as investors

feared U.S. President Donald Trump's sweeping tariffs would tip

the global economy into a recession.

Asian shares struggled to recover their heavy losses from

the previous session as Japan's Nikkei fell 1.85%,

extending its 2.8% slide from Thursday.

MSCI's broadest index of Asia-Pacific shares outside Japan

dipped 0.26% in thin trade, with markets in

China, Hong Kong and Taiwan closed for a holiday.

Overnight S&P 500 companies lost a combined $2.4 trillion in

stock market value, their biggest one-day loss since the

coronavirus pandemic hit global markets on March 16, 2020, while

other Wall Street indexes similarly clocked sharp falls.

The bruising selloff across markets came after Trump on

Wednesday announced Washington's steepest trade barriers in more

than 100 years, sending investors scrambling for safety assets.

"If the current slate of tariffs hold, a Q2 or Q3 recession

is very possible, as is a bear market," said David Bahnsen,

chief investment officer at The Bahnsen Group.

"The question is, does President Trump seek some sort of

off-ramp for these policies if and when we see a bear market in

the stock market. We believe Trump will then pivot to focus on

the number of companies that are making significant investments

in the U.S., but it's unclear that would reverse market

sentiment."

U.S. stock futures steadied in the early Asian session, with

Nasdaq futures rising 0.05%, while S&P 500 futures

eased 0.06%.

Reflecting the heightened worries of a global recession,

particularly in the United States, traders have since ramped up

bets of more Federal Reserve rate cuts this year, on the view

that policymakers would have to ease more aggressively to shore

up growth in the world's largest economy.

Fed funds futures now point to roughly 96 basis points worth

of cuts by December, from closer to 70 bps shortly before

Trump's tariffs were announced on Wednesday.

"Central banks are not well-equipped to deal with

stagflation as the impacts of slower growth and higher inflation

pull policy in opposing directions," said David Doyle, head of

economics at Macquarie Group.

"This means that stronger core inflation is likely to limit

the extent of any policy response from the Fed due to the

headwinds created for growth."

Fed Chair Jerome Powell is due to speak later on Friday and

investors will be looking out for his latest assessment of the

U.S. economy and any clues on the policy outlook following

Trump's fresh tariff salvo.

In the foreign exchange market, the dollar was up 0.09%

against the yen at 146.23, after having tumbled 2.2%

in the previous session, its steepest daily fall in more than

two years.

The euro steadied at $1.1043 after a 1.9% jump on

Thursday, while the Swiss franc last stood at 0.8591

per dollar, having also surged 2.6% on Thursday.

Against a basket of currencies, the dollar languished

near a six-month low at 102.04.

"Much of the weakness of the U.S. dollar this year can be

related to the weight of long positions that were built into the

end of the year coupled with the refocussing of attention on

U.S. growth risks that have accompanied tariff talk for weeks,"

said Jane Foley, senior FX strategist at Rabobank.

Safe-haven currencies like the yen and the Swissie have

benefitted from investors' flight to safety assets, which also

saw bond prices surging.

The benchmark 10-year U.S. Treasury yield was

last little changed at 4.0436%, having fallen 14 bps in the

previous session. Bond yields move inversely to prices.

Elsewhere, spot gold was perched near a record high

at $3,112.81 an ounce, and was on track for a fifth straight

weekly gain, as worries about the impact of Trump's tariffs on

the global economy boosted the metal's safe-haven appeal.

Oil prices extended their steep decline from the previous

session, with Brent futures down 0.13% at $70.05 a

barrel, while U.S. West Texas Intermediate crude futures

fell 0.15% to $66.85 per barrel.