Wall Street recovers from global sell-off as Trump tariffs fuel recession fears – as it happened (2025)

And finally, a late rally in New York has seen the US stock market close higher tonight. However, the picture over the last month is less impressive.

Today, the S&P 500 share index was up 30 points at the closing bell, a rise of 0.55%, having fallen over 1% in morning trading.

The Dow Jones industrial average jumped around 1%, gaining 417 points to 42,001 points.

But March was still a grim month for US stocks, as investor confidence was hit by growing trade war fears.

The S&P 500 fell 5.7% in March, Reuters calculates, which is its biggest monthly fall since December 2022.

With European stock markets closed, here’s a quick recap.

Global stock markets are on track to post their biggest monthly fall since September 2022, after several weeks in which trade war fears have hit share prices.

European stock markets have closed in the red, with the UK’s FTSE 100 losing almost 1% and bigger losses in Paris and Frankfurt.

That followed heavy losses in Asia where Japan’s Nikkei index lost 4%.

The selloff came after Donald Trump said on Sunday that the reciprocal tariffs he is set to announce this week will include all nations, not just a smaller group of 10 to 15 countries with the biggest trade imbalances.

That has fuelled fears of a global trade war which would hurt growth and drive up inflation.

In other developments:

• Today’s losses are on top of falls during March which have dragged down the MSCI world share index by at least 4.5%, its biggest monthly drop since September 2022.

• Goldman Sachs has lifted the chances of a US recession in the next year to 35%.

• UBS cut its end-of-year forecast for the US stock market.

• A majority of Britons predict the UK will be in recession, or worse, in a year.

• The yen strengthened, as the US dollar headed for its biggest monthly loss since November 2022.

• Gold hit a fresh record high

Downing Street says it expects the UK to be hit by more tariffs when Donald Trump announces his latest round of trade barriers on Wednesday, and said it “reserves the right” to respond to protect the national interest.

European stock markets have also closed deep in the red, hit by fears of an escalating trade war.

Germany’s DAX has fallen 1.3%, France’s CAC has lost 1.5% and Italy’s FTSE MIB is down 1.7%, as investors reacted to Donald Trump’s comments yesterday about how his new tariffs, due on Wednesday, will affect all countries.

After a choppy day, London’s stock market has closed firmly in the red, although off its earlier lows.

The FTSE 100 index of blue-chip shares listed in the City has ended the day down 76 points, or -0.9%, at 8582 points. That’s a two-week low, and the biggest one-day loss in three weeks.

IAG, which owns British Airways, was the top faller, down 6.6% after rival Virgin Atlantic reported that demand from the US was slowing.

Mining companies were also in the top fallers, on concerns that a global trade war will hit growth, and demand for commodities.

In March as a whole, the FTSE 100 share index has fallen 2.6%, its biggest monthly loss since October 2023.

Predictions are swirling about what Donald Trump might announce on Wednesday, when he is expected to lift the curtain on reciprocal tariffs on imports to the US.

Here’s the latest predictions from Goldman Sachs:

• We expect President Trump to announce an average 15% reciprocal tariff, adding 9pp to the effective tariff rate after exemptions. Along with tariffs imposed to date and sectoral tariffs we still expect, this would result in a 15pp total increase.
  

• We raised our forecast for core PCE inflation by 0.5pp to 3.5% at end-2025, lowered our 2025 Q4/Q4 GDP growth forecast by 0.5pp to 1%, and raised our unemployment rate forecast by 0.3pp to 4.5% at end-2025 to reflect weaker GDP growth and the effects of federal spending cuts and layoffs. We raised our 12-month recession probability from 20% to 35%, reflecting our lower growth forecast, falling confidence, and statements from White House officials indicating willingness to tolerate economic pain.
  

• We now expect three consecutive “insurance cuts” this year in July, September, and October, arriving at the same terminal rate of 3.5-3.75%. With inflation and inflation expectations high, the bar for cuts will be higher and a potential increase in the unemployment rate will be important as a justification

Curiously, the Dow Jones industrial average has now shaken off its earlier losses.

The much-storied index, which track 30 large US companies, is now up 31 points, or 0.076%, at 41,615 points.

However, the S&P 500 – which is a much broader measure of the health of the markets – is still in the red, down 0.65% or 36 point lower at 5,544.

Tech stocks are leading the fallers on the Dow Jones Industrial Average today.

Chip giant Nvidia are the top faller, down 4.7%, followed by Amazon (-3.65%), Microsoft (-2.8%) and Salesforce (-2.7%).

Back in the UK, it has emerged that Primark boss Paul Marchant, who this week left the company with immediate effect after admitting an “error of judgment” in his treatment of a woman at a social occasion, had previously been investigated for inappropriate behaviour by his employer.

ABF admitted:

“One previous incident involving inappropriate communication was investigated some time ago. Proportionate action was taken at the time.”

Donald Trump’s enthusiasm for tariffs has made the first quarter of 2025 a “highly eventful period for markets”, says Deutsche Bank in a new report.

They remind us what a dramatic three months it has been:

The US began to impose widespread tariffs, going well beyond those in Trump’s first term. Europe started a huge fiscal regime shift, which even saw Germany reform its constitutional debt brake. DeepSeek’s AI model led to questions about US tech valuations, pushing the Mag 7 into bear market territory. And given the tariff uncertainty and the market sell-off, speculation mounted about a US recession, which would have been almost unthinkable at the start of the year.

So, what might Q2 bring? It all depends what Donald Trump announces on Wednesday, and how other countries react…

Deutsche explain:

Clearly, the reciprocal tariffs on April 2 will be the initial focus, and if other countries retaliate, the big risk is it sets off a broader escalation spiral that exacerbates investor concern.

The second key question is whether the weakness in recent economic surveys starts showing up in the hard data, as that could start to catalyse broader downgrades and ramp up fears of a downturn.

Third, will inflation remain sticky above target across the major economies, as that would really constrain central banks if so, who are mostly still trying to ease policy.

And finally, as in any 3-month period, what are the unknown factors that could take us by surprise, just as we saw in Q1 with the European fiscal shift?

Today’s sell-off has dragged the S&P 500 index of US shares into correction territory – more than 10% off its all-time high.

By Kathleen Brooks, research director at XTB, sums up the mood:

There is an air of capitulation in financial markets ahead of the April 2^nd reciprocal tariff announcement from the US. Global stocks are all in the red, the Eurostoxx 50 index is down by 1.7%, and all sectors are in the red. The biggest decline is for industrial stocks and consumer discretionary, followed by the financial sector. Reciprocal tariff fears are infecting the whole stock market, even defensive sectors like energy and utilities are lower at the start of the week, which is a sign that investors are cutting their positions sharply and choosing to pause ahead of this week’s tariff announcements.

US stocks have also plunged at the open on Monday and the S&P 500 is now in correction territory, dipping 10% from its peak in mid- February.

Tariff fears have deepened over the weekend, there has been no let up from President Trump who said that no country would be able to avoid his reciprocal tariffs.

This dashed any hopes for a last-minute reprieve. There is no where to hide in the stock market, as equities get caught up in the tariff headwinds, which is not helped by the fact that it is the last trading day of Q1.

As flagged earlier, shares in Tesla have dropped 5.7% in early trading, to $248.72.

The president’s Trump Media & Technology Group Corp are down 4.7%.

The S&P 500 index and the Nasdaq have both hit six-month lows, dropping back to levels last seen some weeks before the US presidential election.

US stock indexes have opened sharply lower in New York, aa fears that the Trump White House will announce wide-ranging tariffs trigger a stampede to the exits.

In early trading, the Dow Jones Industrial Average has dropped by 304 points, or 0.7%, to 41,278. The broader S&P 500 has dropped by 1.4%, while the tech-focused Nasdaq has lost 2.4%.

Investors on Wall Street, like in Europe and Asia, are alarmed by Donald Trump’s warning over the weekend that Wednesday’s reciprocal tariffs will “start with all countries. Essentially all of the countries that we’re talking about.”

Traders will have also noted Goldman Sachs’s warning that there is now a 35% risk of a US recession.

These losses mean world stock markets are firmly on course to make March their worst month since 2022, as covered in the introduction.

As Investec analysts explains:

After a bruising period of uncertainty, businesses and financial markets are braced for the US administration’s planned announcement of extra tariffs on 2 April. Behind the scenes, negotiations are underway to limit the damage to trade from ‘Liberation Day’, as Trump has dubbed it.

The scope for this is unclear: if tariff rises are to raise meaningful funding towards tax cuts they will need to be both large and durable. But it is not just US actions that will impact economies; countermeasures will too.

Conversely though, the planned big step up in European defence spending is a tailwind to counter at least some of the headwinds from US policy shifts, which in any case will not fall evenly across countries. Uncertainty looks almost certain to persist beyond 2 April, leaving scope for markets, and us, to reassess the outlook in future.

A UK recession is more than likely this year for two reasons, to say the least, Professor Costas Milas of the University of Liverpool’s management school tells us:

1. Divisia money growth, which is a reliable predictor of UK growth, has just slowed down to 2.4% per annum in February (down from 2.8% in January).

2. As I also write in my LSE Business Review blog, Trump’s trade wars are already impacting negatively on business investment, and consequently UK economic growth. Nevertheless, Trump’s trade wars have not yet “commenced” in full strength. If trade wars accelerate from April the 2nd onwards, the impact will be much more severe, and therefore, it is more likely than not that we will end up with a UK recession...

Politico are reporting that “swaths of Republicans on Capitol Hill” are scrambling to shield their states from Donald Trump’s next wave of tariffs.

While the US president claims tariffs will benefit America, it seems many of his own party have realised the damage that slapping tariffs on imports, and risking a tit-for-tat trade war, will have.

Politico says “dozens of GOP lawmakers”” are privately worried that another round of tariffs will raise prices on U.S. consumers, cripple American farmers and rattle the stock market.

They explain:

In anticipation, they are coordinating with various industry groups to push the administration for exemptions that protect key local industries from that kind of pain. They’re also trying to effectively void some of the tariffs on key products once they go into effect, lining up to push Trump officials for so-called exclusions.

Their quiet maneuvering signals the heightened anxiety among Republicans about the next phase of his trade wars — and the political pitfalls ahead for the president and his party. Four Republicans with direct knowledge of the strategy, granted anonymity to discuss the private conversations, described the behind-the-scenes planning as concerted and targeted.

The Wall Street futures market does not make pleasant viewing from the White House.

Trump Media & Technology Group Corp, which runs the US president’s Truth Social social-media platform, are on track to fall 3.7% when trading begins in an hour’s time.

Elon Musk’s Tesla is also heading for a bath – its shares are down 6% in premarket trading.