A look at the day ahead in European and global markets from

Wayne Cole

The jury is in, and it turns out investors really don't like

a tariff-induced global trade war and likely recession - who

knew? Wall St futures are down around 3%, as is the Nikkei,

while European stock futures are off around 1.7%. Treasury

yields hit multi-month lows, while the dollar index hit a near

six-month low in pretty chaotic conditions.

The reaction was of a piece with the high drama around the

announcement, as President Donald Trump read off various levies

on live TV from a big blue and yellow board. Headlining the list

was 34% extra for China, 20% on the EU, 32% for Taiwan, 24% for

Japan and 46% for Vietnam.

The inclusion of high levies for Asia was clearly a shock to

tech shares since it promises to raise costs sharply across

their supply chains. Apple shares were down 7% after the bell.

Almost all analysts, contrary to arguments from the White

House, see the end of free trade as a shock to U.S. and global

economic growth and will be revising up the risk of recession.

That was clear in Fed funds futures which rose to price in

80 basis points of Fed easing this year, even though these

tariffs will surely cause U.S. inflation to spike sharply.

Analysts are talking of price rises of $6,000 to $10,000 on new

autos alone.

Fed officials like to say they will look through a one-off

increase in the price level, but the pandemic shows what happens

when firms realise they can lift prices and blame it on someone

or something else.

It's also not clear how permanent these tariff levels will

be, with the White House saying it's open to horse trading with

different countries. It's going to be hard for firms to plan

long-term investments on such shifting sands.

And then there's the coming countermeasures, as countries

line up to defy Trump's new world order. European Commission

President Ursula von der Leyen was just on the wires to pledge

retaliation should negotiations fail.

As students of history will know, it was the U.S.

Smoot-Hawley tariffs in the early 1930s that put the "great" in

the "Great Depression".

Trying to keep up with the latest tariff news? Our new daily

news digest offers a rundown of the top market-moving headlines

impacting global trade. Sign up for Tariff Watch here.

Key developments that could influence markets on Thursday:

- EU producer prices, service PMIs

- US trade data, ISM services, weekly jobless claims. Fed

Vice Chair Jefferson and Governor Cook speak