Stocks Drop Ahead of Tariff Day Amid Economic Worries

Global stock markets followed a late rally in the U.S., while gold continued its winning streak, as concerns over impending U.S. tariffs kept markets on edge. Europe's Stoxx 600 Index rose by 1% at the open, recovering from a four-day losing streak.

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Stocks in Asia also saw gains, while U.S. equity futures showed little movement. Gold prices moved closer to $3,150 per ounce, while U.S. Treasuries and the dollar remained steady.

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Traders received more insight into President Trump's upcoming announcement on tariffs, scheduled for 3 p.m. Wednesday in the White House Rose Garden. However, the specifics of the new tariffs remain uncertain.

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The ambiguity surrounding whether Trump will opt for a more lenient or aggressive approach has caused investors to shy away from making bold stock moves, prompting Wall Street analysts to lower their predictions.

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Goldman Sachs revised its forecast for Europe's Stoxx 600, following similar adjustments made by their U.S. counterparts. Sharon Bell’s team lowered their 12-month target for the index to 570 points from 580, citing weaker economic growth projections.

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Homin Lee, senior macro strategist at Lombard Odier Singapore, noted that market stability would return if Trump’s tariff plans were perceived as a one-time event that was relatively simple to implement. However, if Trump fails to clarify his intentions, markets could face renewed pressure.

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Trump has presented his April 2 tariff announcement as a "Liberation Day," marking the beginning of a more protectionist approach in response to what he claims are unfair practices by U.S. trading partners.

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The President has already imposed tariffs on Canada, Mexico, and China—America’s top three trading partners—as well as on automobiles, steel, and aluminum. Import taxes on copper could be introduced in the coming weeks, and Trump has also threatened duties on pharmaceuticals, semiconductors, and lumber imports.

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Once these measures are disclosed, there could be an extended negotiation period with key trading partners, potentially prolonging the volatility longer than markets anticipate, according to Sat Duhra, a portfolio manager at Janus Henderson Investors in Singapore.

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In Asia, commodities saw an upswing, particularly iron ore and base metals, after data indicated improvements in China’s manufacturing sector. Copper, which had been in a five-day losing streak, rose by 0.5%, reaching $9,759 per ton on the London Metal Exchange.

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Meanwhile, shares of Xiaomi Corp. fell by around 5% in Hong Kong. The tech company confirmed that one of its SU7 electric cars had been involved in a fatal accident, with local media reporting three deaths as a result of the incident.

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