Global stock markets experienced one of the most rapid downturns in history, with major indices across Asia, Europe, and the US taking significant hits.

Since April 2, $9.5 trillion has been wiped off the MSCI All-Country World Index, as investor reactions to US president Donald Trump’s surprise tariff announcements sent markets into a tailspin.

The Nasdaq entered bear market territory, falling over 20% from its recent peak, while the Dow Jones experienced its largest drop since the COVID-19 pandemic. European stocks also took a sharp downturn, with Germany’s DAX sinking more than 9.5%.

Meanwhile, Wall Street’s tech giants lost over $1 trillion in a single session.

Trump’s new tariffs, which caught markets off guard due to their scope and intensity, led to retaliatory moves from China and the European Union. China imposed 34% tariffs on US goods, while the EU warned of countermeasures should negotiations fail.

The speed and breadth of US President Donald Trump’s tariff announcements caught markets off guard, leading to stop-loss triggers, forced deleveraging and panic selling, financial services firm Sygnia said in a note.

The Nasdaq Index in the US has already entered bear market territory on a drop of over 20% from its recent high, while the Dow Jones Industrial Average experienced its largest drop since the Covid-19 pandemic.

“To put the numbers in perspective, however, markets dropped by 57% during the Global Financial Crisis of 2008 and by 33% with the Covid 19 announcement.”

The primary trigger for the sell-off was the uncertainty surrounding these new tariffs, with fears of a potential global trade war and recession heightening market volatility.

China has already retaliated with 34% tariffs on US goods, further exacerbating the situation and leading to concerns about reduced global demand and disrupted supply chains.

“Perversely, current fundamentals, such as a still-resilient labour market, suggest the US economy is not collapsing, and cool heads in non-US governments could lead to reduced tariffs and a quick recovery,” said Sygnia.

Citing US Treasury Secretary Scott Bessent, it said that more than 50 countries have reached out for trade talks – Taiwan has offered to cut all tariffs on US imports, India has said it is open to cutting tariffs on more than half of its US imports, the EU has committed to negotiations and UK PM Keir Starmer has highlighted the need for a “cool-headed” approach.

Japan was the first to open the door for actual negotiations, with its stock market rising 6% on the news.

Sygnia highlighted that markets were rattled by the fact that the tariff decision bypassed Congress, being made solely by President Trump through an executive order under emergency powers.

“There is no precedent for developed countries to negotiate trade policies in this manner. In anticipation of increased volatility around tariffs, we have been proactively managing risk by reducing our equity weighting since the start of the year, and we further reduced our holdings last week after the tariffs announcement.”

Despite the dramatic downturn, Sygnia remained cautious but optimistic about potential recovery. It said that during times of heightened market volatility, market corrections are a normal part of economic cycles and, while risks remain high and the outlook is very obscured by tariff uncertainty, analysts foresee potential for market recovery.

JP Morgan analysts estimate the S&P 500 will trade between 5 200 and 6 000 over the next year, while Goldman Sachs is forecasting a range of 5 300 to 5 900 – compared to Friday’s close of 5 074.

Markets will trade to the top of that level as countries negotiate lower tariffs and will fall as countries retaliate, Sygnia said.

Investec’s chief investment strategist, Chris Holdsworth, noted that the knock-on consequences of ‘Liberation Day’ continue to reverberate through global markets.

“The market has reacted as one would expect – with a steep drawdown,” he said, adding that the most important call now is whether the actions of the White House will lead to a recession in the US.

“It is difficult to have a firm view on this. The tariffs might be reversed shortly but even then, there could well be long-term damage to confidence, and the credibility of the current US administration. The betting market is pricing in a 64% chance of a recession in the US this year.”

The US bond market is now pricing in around a 50% chance of a recession in the US, based on Bloomberg modelling.

However, Treasury Secretary Scott Bessent doesn’t think the market should price in a recession, based on the labour data for March. “We could see from the jobs number on Friday, that was well above expectations, that we are moving forward, so I see no reason that we have to price in a recession,” he said.

Holdsworth said that given the market shock and the growing likelihood of a US recession, it is little surprise that the betting market is pricing in an 80% chance that Republicans will lose their majority in the House next year.

Republicans are still favourites to retain the Senate, for now at least, he said.

“It appears that president Donald Trump wants neutral trade balances with every country, while trade advisor Peter Navarro seems relaxed.

“Not everyone is as sanguine about the situation. According to CNBC, a group of high-profile tech and finance leaders is travelling to Trump’s Mar-a-Lago resort in Florida to “talk common sense” to the president,” said Holdsworth.

However, it is not clear that Trump thinks the best way out of this is for him to reverse his tariff policy, but would rather see interest rate cuts.

Fed chief Jerome Powell does not seem completely convinced though, said Holdsworth, added that Powell pointed to “elevated risks of both higher unemployment and higher inflation”.

A major sell-off is shaking global markets, but the smartest investors are “leaning in”, not backing away, said Nigel Green, CEO of global financial advisory firm deVere Group.

He said that despite the escalating trade tensions and market turmoil, investors needed to stay invested and stay strategic. “History teaches us that when others panic, opportunity is created. Savvy investors understand that volatility is part of the price you pay for superior long-term returns.”

Green said that recoveries often begin when sentiment is still deeply negative. “Those who stay invested and act strategically during times like these are consistently the ones who reap the biggest rewards,” he said.

However, he warned that a more tactical, precise approach is now essential. “This is not the time for complacency or guesswork. We’re entering a period where quality, diversification, and resilience will define success.

“Investors should be focusing on companies with strong fundamentals, global reach, and the ability to withstand pricing pressures. Regions less exposed to the tariffs fallout could also offer compelling opportunities.”

He also stressed that parking assets in cash is far from risk-free.

“Holding cash may feel safe, but it is not a long-term strategy,” he warned. “Inflation relentlessly erodes the real value of money, and missing the market’s sharpest rebound days can have devastating effects on long-term portfolio performance.”

Green said that the idea that waiting for perfect stability will somehow protect investors is a costly illusion. “While Trump’s tough stance on trade is likely to keep markets choppy for the rest of the year, volatility itself can be a powerful ally for disciplined investors.”

“Trade tensions, political posturing, and economic fears are part of the investment landscape. Those who can filter out the noise and stay focused on fundamentals will be best placed to seize the opportunities that follow.”