HONG KONG: On the heels of a tumultuous start to the week, Asian and European markets managed to gain some ground on Tuesday (April 1), recovering slightly from significant recent plunges. However, the overall market sentiment remains sluggish and clouded with uncertainty, as gold prices skyrocketed to an all-time high, indicating investor apprehension regarding imminent developments from the Trump administration.

President Donald Trump has been gearing up for what he calls "Liberation Day," set for Wednesday, when he plans to announce sweeping tariffs affecting all countries. The President, known for his controversial trade policies, stated on Monday that he would adopt a “very kind” approach with the tariffs. However, the lack of specific details on which nations will be impacted has left traders grasping for clarity amidst rising fears of a potential recession.

Adding to the anxiety, Trump’s earlier announcement regarding a proposed 25 percent tariff on automotive imports has further dampened the mood across global markets. Analysts warn that this volatility could persist as nations respond either by complying with US demands or retaliating against them, creating a cycle of escalating trade tensions.

In a bid to mitigate the fallout, Vietnam announced plans to reduce tariffs on various goods, including vehicles and liquefied gas, while both the European Union and Taiwan are preparing countermeasures to the anticipated tariffs. This has sparked discussions among Wall Street investors, with some speculating that the market reaction on April 2 might be less severe than initially feared, potentially leading to a bounce-back in risk assets.

However, caution prevails. Analysts express concerns that the economy may struggle under the pressure of such drastic policy changes, especially as households are increasingly finding it difficult to maintain their spending habits in the face of growing uncertainties.

Tuesday’s market activities saw a slight recovery across key Asian indices, including Tokyo, which had been severely affected by sell-offs in major automotive firms like Toyota and Honda. Other markets in Hong Kong, Shanghai, Sydney, Seoul, and others experienced modest gains, while Mumbai faced a slight decline.

In Europe, major stock exchanges in London, Paris, and Frankfurt also noted an uptick in the morning trading session. However, the overall revival remains fragile, reminiscent of the tentative gains in New York, where the S&P 500 experienced a rebound but closed the previous quarter with its worst performance since 2022.

Amidst this tumultuous atmosphere, gold continues to be seen as a safe haven, reaching a staggering price of $3,149.00. This surge coincides with an increase in the VIX “fear index” on Wall Street, which rose for the fourth consecutive day.

Market experts, such as Michael Wan at MUFG, suggest that the current valuations in Asian markets may not accurately reflect the potential disruptive impacts of these tariffs. He emphasized the need for investors to prepare for a structural shift in the global economy, one that could transcend the daily fluctuations and uncertainty that have become commonplace.

As investors brace for the forthcoming announcement from Trump, the focus remains on what is to come and how it will unfold across international markets. Will nations retaliate, or will there be a surprising cooperative response? The world is watching closely.