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

Wayne Cole

It's been a rocky start to the week in Asia as a rush from

risk left stocks down across the board, while bonds extended

their rally and gold rose to another record.

Sentiment was fragile enough ahead of the announcement of

U.S. tariffs on Wednesday but President Trump made it more so by

telling reporters on Air Force One that the levies would cover

all countries and not just a select few. He has a habit of

dropping these comments early in the Asia trading day when

liquidity is lacking, and sets off big waves as a result.

The Nikkei led the rout with a fall of 3.8%, the largest

daily drop in six months, and pretty much all of Asia was in the

red. Nasdaq futures shed 1.3% and the major European stock

futures followed.

Trump's new-found indifference to rising car prices seemed

to convince analysts he was serious about going all in. Goldman

Sachs now expects reciprocal tariffs will average 15% across all

U.S. trading partners. In the same note, it lifted the chance of

a U.S. recession to 35%, from 20%, and the "R" word seems to be

on everyone's lips.

Investors are counting on this coming slowdown to outweigh

the inflationary impact of tariffs and prod the Fed into cutting

rates by 75 basis points this year, though it would likely take

a sharp rise in unemployment to warrant such action. Markets

have around 60 bps of ECB easing priced in for this year and 50

bps for the Bank of England.

The thought of all this easing, combined with the flight to

safety, offered comfort to bond investors. Ten-year Treasury

yields fell to 4.21% from a top of 4.40% last Thursday. It's an

open question whether this rally will continue once the actual

inflation data start showing the impact of tariffs on prices.

For now, lower yields have dragged the dollar down on the

yen, and even the euro and pound have edged higher. Yields

aside, though, it may become harder for the dollar to get its

usual boost as a safe harbour when the source of all this

turbulence is the White House itself.

Key developments that could influence markets on Monday:

- Data on German retail sales, CPI and import prices

- Speakers from the Riksbank and Norges Bank

- Dallas Fed manufacturing survey for March