Global Markets Brace for Economic Slowdown Amid U.S. Market Turbulence

Global and European markets brace for a slowdown as U.S. stocks decline. The Nasdaq experienced its steepest drop in over two years, while bond yields plummeted and expectations rise for potential rate cuts. Tesla's shares have plunged, and the 'Trump trade' retreat influences global market dynamics.

Global and European markets are preparing for a slowdown as U.S. stocks took a severe hit overnight. The Nasdaq's 4% decline marked its steepest drop in two-and-a-half years, with bond yields also falling significantly. This shift has investors considering a possible 50-50 chance for Federal Reserve rate cuts by May.

Tesla shares have halved since their post-election highs, while the dollar, which had climbed due to anticipated Trump policies, has faltered as tariffs are imposed on neighboring countries. The retreat of the "Trump trade" and the lack of the "Trump put" are contributing factors, prompting Citi to downgrade its U.S. asset allocation recommendation to "neutral" from "overweight."

Despite efforts to stabilize, Asian markets remain skittish, with stock movements in Tokyo, Seoul, Hong Kong, and Sydney managing only modest recoveries. Currency markets remain largely quiet, with the yen rising to a new five-month peak, reflecting stocks catching up with shifts in the dollar/yen pairing.

(With inputs from agencies.)