【MACRO Trends】Trump’s tariffs hit global markets, and risk aversion swept the investment sector

The "toughest tariffs in a century" recently announced by the Trump administration are reshaping the global market landscape, triggering a stock market crash, a surge in demand for safe-haven assets, and a widespread spread of market panic. From the influx of funds into gold ETFs to the sharp turmoil in global stock markets, investors are re-evaluating their allocation strategies for risky assets while concerns about a recession are growing.

1. Tariff policy triggers risk aversion in the market

Trump's new tariff system has had a widespread impact on the global economy, and investors have flocked to safe-haven assets. Data shows that gold ETFs (such as GLD and IAU) attracted more than US$650 million in inflows last week, and the cumulative inflows since the beginning of the year have reached US$9.9 billion. At the same time, ultra-short bond ETFs (such as SGOV and BIL) also recorded an inflow of US$3.5 billion, showing investors' strong demand for cash proxy tools.

Market analysis pointed out that Trump's tariff policy not only exacerbated trade tensions, but also triggered concerns about a global economic recession. Bank of America called it the "biggest shock to global trade in modern times," while UBS Group AG warned that U.S. economic conditions could deteriorate further if tariffs persist.

2. Global stock markets plummeted and panic spread

Global stock markets suffered a "Black Monday"-style plunge at the opening of trading on Monday. S&P 500 index futures fell more than 4.7%, Nasdaq futures fell more than 5.5% at one point, and Dow Jones index futures fell more than 4%; Asian markets also suffered heavy losses, with the A-share ChiNext Index falling nearly 10% and the Hong Kong stock Hang Seng Index closing down 10.7%. The VIX fear index of the U.S. stock market soared to above 40, reaching its highest level since the 2020 epidemic.

Global stock markets suffered a "Black Monday"-style plunge at the opening of trading on Monday. S&P 500 index futures fell more than 4.7%, Nasdaq futures fell more than 5.5% at one point, and Dow Jones index futures fell more than 4%; Asian markets also suffered heavy losses, with the A-share ChiNext Index falling nearly 10% and the Hong Kong stock Hang Seng Index closing down 10.7%. The VIX fear index of the U.S. stock market soared to above 40, reaching its highest level since the 2020 epidemic.

3. Risk aversion differentiation between precious metals and currency markets

Although gold is often viewed as a safe-haven asset, the precious metal has not been immune to extreme market panic. In early trading on Monday, spot gold fell 0.56% at one point, while silver fell more than 2%. Analysts believe that investors are selling precious metals to make up for losses in other assets.

At the same time, the Japanese yen rose by more than 1% due to its safe-haven properties, 10-year U.S. Treasury futures jumped, and the yield fell by 14 basis points. The dollar fell below 145 yen for the first time since October last year. Venture currencies such as the Australian dollar became targets of selling, and leveraged funds' short positions increased for the third consecutive week.

IV. Market Forecast and Investor Strategies

Faced with the violent market turbulence, analysts have different views on the outlook. JPMorgan Chase expects the U.S. economy to fall into recession due to tariffs, with full-year GDP growth rate lowered from 1.3% to -0.3%. UBS Global Wealth Management downgraded its rating on U.S. stocks to neutral and advised investors to remain cautious.

However, some investors believe the current plunge could create a "perfect buying opportunity." JPMorgan Asset Management believes that the S&P 500 has entered a buy-on-dip range, with historical data showing that the average P/E ratio before a recession was 15.6, while the current P/E ratio remains around 22. CNBC commentator Jim Cramer warned that if Trump does not adjust his tariff policy, the market could repeat the "Black Monday" crash of 1987. But he also advised investors to remain calm, believing that long-term investment is still a rational choice.

V. Conclusion: Investment Decisions in Uncertainty

The global market turmoil caused by Trump's tariff policy is still continuing, and risk aversion has become the main theme of the current market. From the influx of funds into gold ETFs to the sharp correction in the stock market, investors are re-examining the balance between risk and reward. In a market environment shrouded in uncertainty, short-term volatility may intensify, but long-term investors need to pay attention to potential opportunities for policy shifts and economic recovery. As Cramer said, “Recognize that there will be some pain, but you can’t avoid it — staying the course is key.”