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".

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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