Stocks plumb new depths as China responds

The rush to sell risk assets is becoming a stampede, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.

Stocks keep falling as China announces retaliatory tariffs

Day 2 of the Trump Trade War has seen stocks fall further and countries begin to respond in earnest to Wednesday’s tariff bonanza. Dow futures slipped below 40,000 and neared 39,000 on news that China would respond with fresh tariffs of its own. The chaos engulfing the global economy makes a recession much more likely, which is why we’ve seen increased chances of Fed rate cuts at the May and June meetings.

Short-term bounce likely?

Today’s trading has had an air of panic about it, which may provide the fuel for a short-term bounce, but until the administration changes its tune on tariffs or gets its tax cut plans through such rallies are unlikely to go on too long. With the VIX at elevated levels, investors can continue to expect wild swings for the time being.