LONDON, April 7 (Reuters) - What matters in U.S. and

global markets today

By Mike Dolan, Editor-At-Large, Financial Industry and Financial

Markets

Forget about those puts. The White House does not seem concerned

enough about crashing global stock prices to reverse its massive

trade tariffs, and the Federal Reserve appears in no hurry to

deliver rapid interest rate cuts. So the market sell off deepens

and threatens to turn into a crash.

I'll discuss all the market mayhem and then explore some

competing history lessons on trade and explain why they may be

bad news for U.S. Big Tech mega stocks.

Today's Market Minute

* On Sunday, Trump indicated he was not concerned about losses

that have already wiped out trillions of dollars in value from

share markets around the world. "I don't want anything to go

down. But sometimes you have to take medicine to fix something,"

he said.

* Taiwan stocks plummeted almost 10% on Monday, the biggest

one-day percentage fall on record. Taiwan's president has taken

to X to pledge a "golden age" of shared prosperity with the U.S.

* Some hedge funds say they are offloading all or most of their

holdings of stocks as U.S. President Donald Trump's trade war

wipes out trillions of dollars of market value and forces them

to curtail trading using borrowed cash.

* EU countries will seek to present a united front in the coming

days against U.S. tariffs, likely approving a first set of

targeted countermeasures on up to $28 billion of U.S. imports

from dental floss to diamonds.

* Fake cosmetics, massage pillows and sex toys. These are some

clues pointing to a suspected Russian-run sabotage plot behind

parcel explosions in the UK, Germany and Poland last summer, a

person with knowledge of the Polish investigation told Reuters.

Stocks Crater Again, No 'ifs' or 'puts'

Any investor hesitation in offloading expensive U.S. stocks

earlier this year was partly due to suspicion that President

Donald Trump would pull back or soften his tariff plan in the

face of sharp equity market losses.

But after the worst week on Wall Street since the pandemic

hit in 2020, Trump effectively doubled down on Wednesday's

tariff sideswipe against the rest of the world. "Sometimes you

have to take medicine to fix something," he said as he returned

from a weekend of golf in Florida.

S&P 500 futures plunged another 4% at one point on

Monday, putting the market on course to enter full-blown bear

market territory as losses from recent peaks top 20%. With the

VIX 'fear index' of volatility soaring as high as 60 for

the first time since August, the whole financial complex is on

edge.

Global stocks in Asia and Europe tanked again today, with

Hong Kong's Hang Seng clocking a 13% loss in its biggest

one-day drop since the traumatic emerging markets crisis of

1997. It's now in the red for the year.

Treasury yields, however, backed up, as did the

dollar, especially against China's yuan. Oil

prices fell to their lowest in four years, and both gold

and Bitcoin fell too, the latter to its lowest

since the election in November.

If there is a 'Trump put' in the stock market, the strike

price would appear to be much lower than Friday's close. And

investors appear set to dump equities until they reach it.

The current Washington tariff plan and the unfolding

retaliation, such as China's 34% tariffs on all U.S. exports,

look likely to sow recession at home and abroad, an outcome that

was unthinkable to many people at the start of the year.

Goldman Sachs now sees a 45% chance of a U.S. recession this

year, effectively a coin toss. JPMorgan last week said there was

a 60% chance of a wider global downturn.

Time for a Fed rescue then?

Much like the imagined Trump put, the 'Fed put' seems out of

sight right now.

On Friday, Fed Chair Jerome Powell outlined concerns about

the trade uncertainty and business anxiety, but he put as much

emphasis on the potential inflation spur from tariffs as the

possible damage to growth. And he said he saw little in the

labor market to warrant early rate cuts.

Absent a shift of tone from Trump or Powell or some rowback

on promises of trade retaliation, then the most important news

for markets in the coming days will come with the corporate

earnings season that kicks off in earnest this week.

With such seismic uncertainty, investors are likely to see a

sweep of downgraded outlooks and profit warnings, which will

only add more fuel to the fire.

And now I'll explain why U.S. tech firms and banks may find

themselves squarely in the crosshairs of this escalating trade

war.

Tough Tariff History Lesson for US Tech

The problem with U.S. President Donald Trump using

historical grievances to justify a trade war is that others will

do likewise, leaving richly-valued U.S. tech firms and banks in

the crosshairs of retaliation.

One of the big puzzles about last week's dramatic stock

market plunge following the announcement of the sweeping U.S.

tariff hikes was that so few investors seemed prepared for it

when it was hiding in plain sight.

Trump's tariff plans, while at the high end of expectations,

were flagged endlessly for months before and after his November

5 election victory. Resulting retaliation from China, Europe,

Canada and others was publicly and repeatedly promised too.

That it took up to last Thursday for markets to begin to

factor in a wider recession is bizarre at best, negligent at

worst.

Even stranger was that being long U.S. megacap tech stocks

was still considered the most crowded trade on the planet as

recently as March. And yet by Friday, the once "Magnificent

Seven" leaders of the sector were nursing a bear market

25%-plus decline from their post-election peaks in December.

It may simply be a case of the most crowded trades emptying

out the quickest. But there are other reasons for Big Tech to

turn tail.

The Rest is History

Trump is justifying his decision to impose the highest

average U.S. import tariffs in more than a century with a

history lesson on how overseas trading partners have "looted,

pillaged and raped" America and how often "the friend is worse

than the foe."

Others have similarly dusted off the spreadsheets and

history books, but they find a different narrative.

Trump's widely-criticized tariff formula focused solely on trade

in goods, not services. But experts point out that this quid pro

quo was precisely how the U.S. chose to design the globalized

trading system that it's now choosing to unravel.

The global dominance of U.S. Big Tech companies, whose stock

valuations have skyrocketed for more than a decade, was one of

the big prizes Washington secured.

Under Pressure

In a recent article, trade economist Ricardo Hausmann

questioned the administration's sole focus on goods trade,

adding that tariff retaliation may be beside the point.

"America's economic ties to the rest of the world go far

beyond goods. Services and investments are equally - if not more

- important. And if that's where its advantages and potential

vulnerabilities lie, there is little reason for other countries

to retaliate with tariffs."

Counter-tariffs certainly might come - China already announced

measures on Friday - but this is not where the pain would be

felt most. The outsized slide in U.S. tech and bank stocks, as a

result, reflects more than just recession fears.

Hausmann details how last year's $1.2 trillion U.S. goods

trade deficit is only half the story, as there was nearly a $1

trillion U.S. surplus in services like digital,

telecommunications and finance, if the repatriated profits of

overseas subsidiaries are added back.

In effect, America's overall trade is nearly in balance.

But given that the value of U.S. investments abroad is

estimated to be $16.4 trillion compared to the $374 billion that

foreign companies earned in America last year, the former is a

much more valuable target for any tit-for-tat reactions than

U.S. goods, he said.

What's more, U.S. dominance in tech and intellectual

property was not an accident. Indeed, it is rooted in the

Uruguay Round of trade talks in 1994, when developing countries

agreed to enforce rich countries' IP protections in exchange for

goods market access.

If the U.S. is reneging on the latter, the former may be

considered fair game.

"While the debate in the U.S. and abroad is focused on

tariffs and their impact on prices and exports, other countries

will soon begin to wonder whether protecting America's most

valuable economic assets - its IP and the global mechanisms that

allow it to be monetized - still serves their interests,"

Hausmann wrote.

Emerging economies aside, European leaders - with their

multiple grievances against U.S. Big Tech and demands for fairer

digital taxation - see this vulnerability too.

France, for one, said its companies should pause investments

in the U.S. while the situation is clarified. French Finance

Minister Eric Lombard also said Paris was working on "a package

of responses that can go well beyond tariffs".

The European Union's recently adopted "Anti-Coercion Instrument"

allows it to limit offending countries' access to public

procurement tenders, restrict protection of IP rights or limit

financial service firms' access to EU markets.

Too hefty to invoke?

"Donald Trump buckles under pressure, corrects his

announcements under pressure, but the logical consequence is

that he must also feel the pressure - and this pressure must now

be exerted from Germany, from Europe," German Economy Minister

Robert Habeck said on Thursday.

The gloves are off.

Chart of the day

Hong Kong's benchmark Hang Seng stock index was one

of the star performers of the year prior to Trump's trade

sideswipe last week. But it plunged 13% on Monday, falling into

the red for the year to date and recording it biggest one-day

drop since the traumatic emerging markets crisis of 1997.

Back then, the regional crisis became so severe that the

Hong Kong Monetary Authority was eventually forced to intervene

to buy equities as part of its defence of the HK dollar peg.

Monday's drop unfolded despite the fact that a unit of

China's sovereign fund, Central Huijin Investment, bought

China-listed stocks to defend market stability.

Meanwhile, the Hang Seng Tech Index plummeted 17%,

marking its worst single-day performance since records began,

bringing the index close to where it began the year before the

DeepSeek-inspired rally.

Today's events to watch

* U.S. February consumer credit

* Federal Reserve Board Governor Adriana Kugler speaks

Opinions expressed are those of the author. They do not

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