Trump fuels recession fears

General market commentary

Equity markets experienced a sharp decline on Monday, with the Dow Jones dropping nearly 900 points, the S&P 500 falling 2.7%, and the Nasdaq plummeting 4%—its worst single-day loss in two and a half years. The selloff was triggered by heightened recession fears following an interview with President Donald Trump, where he did not rule out the possibility of an economic downturn. Investor sentiment was further rattled by persistent concerns over tariffs and slowing economic growth. The Federal Reserve Bank of Atlanta's GDPNow estimate for first-quarter GDP growth fell to -2.4%, a stark reversal from the 2.3% estimate in late February. Key factors behind this shift included a surge in imports ahead of potential tariffs and weaker consumer spending amid declining confidence. However, despite short-term economic risks, expectations remain that pro-growth policies, such as tax cuts and deregulation, along with lower interest rates, could support a rebound later in the year.

Technology shares were among the hardest hit, with MicroStrategy and Coinbase declining over 16% and 17% respectively, following a slump in bitcoin below $80,000. Tesla shares plunged 15.4%, erasing all post-election gains after CEO Elon Musk publicly backed Trump and was appointed to lead his government efficiency initiative. Meanwhile, bond markets provided some stability, with U.S. investment-grade bonds gaining 2.1% year-to-date. Developed-market international large-cap equities have also performed well, rising 10.6% this year, underscoring the benefits of diversification. Looking ahead, investors are closely watching key inflation data, including the February consumer price index (CPI) release on Wednesday, which is expected to show a slight decline in inflation. Bond yields have edged lower, with the 10-year Treasury yield near 4.22%, as markets anticipate multiple Federal Reserve rate cuts this year in response to slowing inflation and economic growth.

Latest market and economic update

Asian equities tumbled on Tuesday, led by sharp declines in the tech sector, as markets followed Wall Street’s overnight sell-off amid mounting U.S. recession fears driven by President Donald Trump’s trade policies. Japan’s Nikkei 225 fell 1.4%, South Korea’s KOSPI dropped 1.2%, and Hong Kong’s Hang Seng lost 1%, while Australia’s consumer sentiment surged to a three-year high following an interest rate cut.

US equity futures extended their decline overnight as recession fears deepened following a sharp selloff, with the Dow, S&P 500, and Nasdaq hitting multi-month lows on Monday. Megacap tech shares led the downturn, with Tesla plunging 15.4%, while Delta Air Lines fell 11.2% in extended trading after lowering its profit and sales forecasts due to weaker US travel demand.

European shares closed sharply lower on Monday, with the STOXX indices falling as concerns over U.S. tariffs and higher public spending in the Eurozone weighed on investor sentiment. Major decliners included technology equities like ASML, SAP, and Infineon, while shares in Airbus, Safran, and Rolls Royce also suffered significant losses, though the defense sector continued to outperform due to increased military spending.

The US dollar index remained weak at around 103.7 on Tuesday, near four-month lows, as fears of a potential recession driven by Trump’s trade policies and government shake-ups weighed on sentiment. The dollar weakened against safe-haven currencies like the yen and Swiss franc, while the euro strengthened, pushing the EUR/USD exchange rate to 1.0843 amid expectations of increased defence spending in Europe.

Oil prices fell in Asian trade this morning, nearing a three-year low as fears of a U.S. economic slowdown and escalating trade tensions, particularly Trump’s 20% tariffs on China, weighed on demand. Further pressure came from rising supply, with Trump ramping up U.S. production and urging OPEC to increase output, while markets await the cartel’s monthly report for further insights.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Delta Air Lines slashed its first-quarter profit forecast by half, citing weaker consumer and business confidence amid U.S. economic uncertainty, sending its shares down 14% and dragging airline shares lower. The airline now expects revenue growth of 3% to 4%, down from its previous 7% to 9% forecast, as corporate travel demand softens, particularly from the aerospace, defence, auto, media, and tech industries.

Oracle CEO Safra Catz forecast strong growth for fiscal 2026 and 2027, with revenues expected to rise 15% and 20%, driven by increasing demand for AI computing. Despite reporting slightly lower-than-expected quarterly revenue of $14.13 billion, Oracle is investing heavily in infrastructure, including a $16 billion capital expenditure, to support the growing demand for AI-driven cloud services.

Apple is preparing a significant software overhaul for its iPhone, iPad, and Mac devices, set to be unveiled later this year. The revamp, inspired by the Vision Pro mixed-reality headset's software, aims to unify the design across Apple's platforms by updating icons, menus, and system controls, with a focus on simplifying user navigation and control, to be showcased at WWDC in June.

Novo Nordisk's shares fell more than 9% on Monday after releasing trial data for its obesity treatment CagriSema, which failed to meet investor expectations despite achieving its primary endpoint. The results were seen as underwhelming compared to other treatments, raising concerns about CagriSema's commercial potential.

Taiwan Semiconductor Manufacturing Co reported a 43.1% year-over-year increase in February 2025 revenue, driven by strong AI and high-performance computing demand. However, revenue dropped 11.3% month-on-month due to seasonal factors and inventory adjustments.

Bristol-Myers Squibb will acquire 2Seventy Bio for approximately $286 million, offering $5 per share—a 78.6% premium on its Monday closing price of $2.80. The takeover is driven by their collaboration on cancer treatments, particularly Abecma, a myeloma therapy approved by the FDA last year.

Elon Musk has confirmed that his social media platform X, has been hit by a "massive cyberattack," which he believes was carried out by a large, coordinated group or possibly a nation-state. The attack resulted in multiple outages throughout Monday, with tens of thousands of users reporting issues on Downdetector, and efforts are currently underway to trace the origin of the attack.

BASF SE is preparing for a potential listing of its agricultural chemicals division, with Deutsche Bank and Goldman Sachs assisting in the process. The agrichemical business could be valued at over €20 billion and is expected to be separated by 2027, with the listing potentially taking place in either the U.S. or Germany.

Liverpool Football Club has signed a multi-year kit deal with Adidas, set to begin next season, replacing Nike as their official kit supplier. The agreement, reportedly a five-year contract worth over £60 million annually, marks a return to Adidas for Liverpool, with whom they have a rich history of successful partnerships from 1985 to 1996 and again from 2006 to 2012.

UBS has lowered its price target for Tesla to $225 from $259, citing weaker-than-expected deliveries, margin pressure, and a revised first-quarter delivery forecast of 367,000 units, down from 437,000, while also warning of a 30% downside to 2025 earnings per share despite Tesla’s long-term AI potential. Meanwhile, U.S. President Donald Trump’s public support for Elon Musk has done little to ease concerns over Tesla’s declining brand image, political controversies, and weak sales, which have contributed to a 41% drop in its share price so far in 2025.

Jefferies has upgraded Airbnb to "Buy" from "Hold," raising its price target to $185 from $165, citing durable growth in the company's core lodging business and significant upside potential from experiences and take rate expansion. The firm believes Airbnb is well-positioned for further growth, driven by demographic trends, market expansion, and the relaunch of its Experiences segment, which could add substantial revenue by 2030, while also benefiting from take rate expansion through sponsored listings and other services.

Rosenblatt analysts have reinitiated coverage of Super Micro Computer with a "Buy" rating and a 12-month price target of $60, citing the company's accelerating AI revenues and strong position in the AI space. Supermicro's expertise in liquid cooling and innovative architectures, such as its building block architecture, are seen as key competitive advantages, reinforcing its growth potential in the AI-driven market.

Raymond James has upgraded CME Group Inc. to "Outperform" from "Market Perform," citing strong trading volumes driven by economic uncertainty and geopolitical tensions, with a price target set at $287. CME's trading volumes have been boosted by robust activity in rate and energy futures, which has helped offset concerns about competition and interest rate cuts, positioning the company well in a volatile market environment.

Upcoming data and events

Today's economic data highlights include the JOLTS Job Openings report, which provides insights into the U.S. labour market's health and potential implications for monetary policy. On the earnings front, notable companies such as Ciena, and Dick's Sporting Goods are set to release their financial results.

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