Stocks plunge; bonds, gold buoyed amid recession fears

World share markets have fallen sharply while gold surged to another new record after US President Donald Trump said tariffs would essentially cover all countries, stoking worries a global trade war could lead to a recession.

Trump's comments to reporters on Air Force One seemed to dash hopes the levies would be limited to a smaller group of countries with the biggest trade imbalances.

Trump is due to receive tariff recommendations on Tuesday, US time, and announce initial levels on Wednesday, followed by auto tariffs the day after.

"What the Trump administration has shown us so far is that you should not expect a consistent approach," said George Lagarias, chief economist at Forvis Mazars.

"This is what scares the market the most. Inconsistency breeds uncertainty, and markets hate uncertainty."

Europe's STOXX 600 fell one per cent to its lowest level in almost eight weeks on Monday, while major indexes in Frankfurt, London and Paris fell between 0.8 per cent and 1 per cent.

S&P 500 futures lost 0.7 per cent, extending Friday's rout, while Nasdaq futures shed 1.1 per cent.

Japan's Nikkei led the rout in Asia, losing an eye-watering 4.1 per cent and falling to a six-month low as automaker stocks continued to suffer fallout from Trump's talk of 25 per cent tariffs on imported cars.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.9 per cent.

Seeking any safe harbour from the trade storm, investors piled into sovereign bonds and the Japanese yen and pushed gold prices to another all-time high.

The European Union was ready to respond with tariffs of its own, German Chancellor Olaf Scholz said on Sunday, but there were also reports the bloc was preparing a list of concessions to offer to Trump.

"For the first time in years, we find ourselves genuinely worried about risk assets," said Ajay Rajadhyaksha, head of rates markets at Barclays.

"If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies," he added. "For the first time in many quarters, we favour core fixed income over global equities."

Many economists are worried that tariffs will hit the US economy hard, even as they limit the Federal Reserve's scope to cut rates by driving inflation in the short term.

Analysts at Goldman Sachs now see a 35 per cent chance of a US recession, up from 20 per cent previously, saying they expect Trump to announce reciprocal tariffs that average 15 per cent across all US trading partners on April 2.

Data out on Friday underlined the risks as a key measure of core inflation rose by more than expected in February while consumer spending disappointed.

That raised the stakes for the March payrolls report due on Friday where any outcome below the 140,000 gain expected would only add to recession fears.

Also due are a rush of surveys on factories and services, along with figures on trade and job openings.

Bond investors seemed to be betting the slowdown in US economic growth will outweigh a temporary lift in inflation and prompt the Fed to cut rates by about 80 basis points in 2025.

This, combined with a flight from risk assets, saw 10-year Treasury yields drop as low as 4.184 per cent while two-year yields hit 3.842 per cent. Germany's 10-year yield fell as low as 2.659 per cent, its lowest since March 5.

The outlook for rates could become clearer when Fed Chair Jerome Powell speaks on Friday, following a host of other Fed speakers this week.

The drop in US yields saw the dollar ease 0.4 per cent to 149.19 yen, while the euro held at $1.0825. The dollar index was steady at 103.97, having slipped for the previous two sessions.

The perceived safety of gold saw the metal hit another all-time high at $3,128.06 an ounce.

Brent rose 0.6 per cent to $74.07 a barrel, while US crude added 0.5 per cent to $69.70 per barrel as Trump threatened secondary tariffs on buyers of Russian oil if he feels Moscow is blocking efforts to end the war in Ukraine.