Before the bell: I Saw Two Bears…

Asian stock markets are also sliding this morning. Several governments are urging the U.S. president to reconsider the steep import tariffs.

As the mudslinging in the tariff war continues, stock markets around the world are bleeding red. By the end of Friday’s trading session, European stocks had dropped by an average of 4.6%. Losses were even steeper on Wall Street, with the S&P 500 down 6% and the Nasdaq falling 5.8%. Financial stocks like KBC (-9.1%), ING (-7.5%), and Banco Santander (-8.8%) took the biggest hits. Investors appear to be bracing for a severe recession and major credit losses. The Bel20 index lost 4.8%. The year had started well for markets in Europe and Asia, but those early gains have now vanished. In the U.S., we’ve officially entered a bear market. On February 19, the S&P 500 stood at 6,144 points; by Friday evening it had closed at 5,074—a drop of more than 1,000 points or 21% from the peak. The Nasdaq is now down 29.5% from its high in December last year. Some investors are predicting a Black Monday, while more opportunistic ones are already scouting for bargains.

This morning, Asian investors are reacting to Wall Street’s sell-off. Japanese stocks are down 7.1% on average. Some of the biggest losers share a common thread in their names: Renesas Electronics (-14.7%), Sumitomo Electric (-15.3%), and Yaskawa Electric (-17.1%). In Hong Kong, the market is down 10.7%, with Lenovo (-19.7%), Geely Automobile (-17.3%), Alibaba (-15.6%), Xiaomi (-15.3%), and BYD (-14.3%) plunging even further. Meanwhile, representatives from numerous governments are pleading with the U.S. president to urgently revise the punitive tariffs. On today’s agenda: Germany will release its trade balance and industrial production figures for February. In the U.S., jeans maker Levi Strauss is set to report earnings.

Tariff Bazooka

Belgium, France, Germany, and Spain want Europe to retaliate with a “grand European plan” against the U.S. tariffs—much like China has. They’re calling for a tariff bazooka, fighting tariffs with even higher tariffs. Italian Prime Minister Giorgia Meloni, however, is urging calm and calling for negotiations. She says the goal should be to eliminate tariffs, not escalate them. Echoing that sentiment is none other than Elon Musk, who, in a video call with Italian Deputy PM Matteo Salvini on Saturday, expressed hope for a zero-tariff agreement between the U.S. and Europe. In addition to Italy, Romania, Greece, and Hungary have also emphasized their strong ties with the U.S.—and those nations could form a blocking minority to prevent a swift European retaliation.

Good Morning, Vietnam

While many products still carry the “Made in China” label, Vietnam has become a major exporter in its own right—so much so that it is now considered a low-wage country even by Chinese standards. Last Wednesday, Trump slapped Vietnam with the second-highest tariff rate (after Cambodia): U.S. imports from Vietnam would face a 46% duty. This is a big issue for American apparel and footwear companies that rely heavily on Vietnamese manufacturing. Still, Nike (+3.0%), Deckers Outdoor (+5.1%), and even Adidas (+0.5%) managed to close higher on Friday after initial losses. Trump said he had a productive conversation with Vietnamese officials and agreed to delay the new tariffs. As a result, the Hanoi stock exchange rose 1.1% this morning.

Did you know…

China is urging consumers and investors not to panic? “The sky will not fall, even if the abuse of import tariffs by the U.S. does affect us somewhat,” reads the bold headline on the front page of the People’s Daily this morning. The paper, a mouthpiece of the Chinese government, says domestic demand can be boosted through interest rate cuts. It also notes that talks with the U.S. remain a possibility.

This article was translated from Dutch and was originally published on Spaarvarkens.be.