Ten trading days that rocked financial markets

Shuntaro Sayuchi said that the pain was a 10/10.

His appendix, not his portfolio of Japanese stocks, which he manages out of San Francisco in California.

The truth would come out just as Matthews Asia's colleagues were on the phone to plot a course for the $7 billion asset management firm through an intensifying market downturn.

Takeuchi said, "I was on the conference call just two minutes before surgery." The nurse asked: "Do you have to be here?"

Tokyo's Nikkei index was heading for a 4% decline on Wednesday, and global equity markets were losing trillions of dollars, the biggest dollar value drops in history.

Since President Donald Trump imposed tariffs on automakers, the 10 trading days have seen the biggest swings in the price of everything from stocks, bonds, oil, and gold to the U.S. Dollar itself.

The selling of U.S. Treasuries, the safest asset on the global market and the cornerstone of international trade, was the most intense in decades. It seemed to be a way to show how much the foundations for finance and trade have been weakened.

The meltdown started after what Trump called "Liberation Day".

On April 2, he raised the highest wall of trade tariffs around the U.S. economic system in 100 years, with a blanket tax of 10% on imports as well as higher rates for individual trading partners.

The week after that, it has become an open economic conflict between the United States and China. By Friday, China was under a U.S. embargo on trade as tariffs reached 145%.

During the wild ride that began on April 2, more than $5 trillion of market value vanished from the MSCI world stock index. The roller-coaster ride since April 2 has revealed how investors were not prepared for Trump's aggressive tariffs, and that his unpredictable nature and reversals could harm the United States' position as the financial centre.

Geoff Wilson is a veteran Australian fund manager. He said, "We have seen a fracture in confidence. We don't yet know the second-order consequences of the market's fall."

The next few weeks will reveal the full extent of any consequences. His funds were buyers during the turmoil.

TOMB SWEEPING

The initial focus of the selling was on any exposure to economic growth, including banks, industrial metals, and companies such as Apple that have supply chains in China.

China then retaliated by imposing a 34% duty on all imports from the U.S., shortly before sunset on April 4, tomb sweeping day, a national holiday for paying respect to ancestors.

The main global stock index has surpassed the threshold of what is called a "correction", a drop of at least 10% from its peak.

Even gold, a safe haven during turbulent times, began to tumble, a sign of doom as investors faced with margin calls had to sell their most secure assets to cover losses.

Wong Kok Hoi is the founder and CEO of APS Asset Management, based in Singapore. He has been worried about this scenario for many years.

He said that he had never imagined tariffs could rise to 125%. In the days following, tit-fort-tat levies increased.

The two biggest economies of the world will cease to trade.

He said that his portfolio had grown by around 20% this year.

TRADE WAR

Wall Street bankers listened in on global meetings to try to calm down clients.

Last weekend, there were hopes that Trump would give in before tariffs are implemented.

On Sunday, after a golfing weekend, reporters asked him what markets were on Air Force One. He replied "sometimes you need to take medicine."

This opened the floodgates. Nasdaq futures soon fell more than 5%, and Nikkei Futures sank 8% before hitting a circuit breaker.

The CBOE Volatility Index - Wall Street's fear gauge - spiked over 60, a level that is usually seen in meltdowns like 2020 or 2008 financial crisis.

The S&P 500 ended the day 17% lower than a record high that it had reached just seven weeks prior. Christopher Forbes, CMC Markets' head of Asia, said that Friday and Monday had the highest trading volume ever.

Takeuchi in California was not only rushing to have surgery but also trying to protect his portfolio.

He said that he traded, buying and then selling stocks when they hit the target price or were at a good buy. He looked for companies with limited U.S.-exposure, without wanting to bet on specific sectors or Trump's trade policy.

I don't want it to sound too dramatic. We are not in a panic. We control the risks and concentrate on stock selection.

BOND FIRE

Currency markets have been the main target of price adjustments for tariffs.

Bonds were the real shocker. In the early morning hours of Wednesday, just after the tariffs went into effect in New York's middle of the night, Treasuries were hit by a huge wave of selling in Asia.

The yields, which are usually small because the market is liquid, exploded and released the most manic phase of the markets' tariff tantrum.

The yield on the 10-year Treasury bond jumped by nearly 20 basis points within two hours. Traders interpreted this as either a sign of forced selling in some part of the market or, more alarmingly, that U.S. government bonds are no longer a safe-haven.

Within hours, the markets were once again thrown into turmoil. Trump shocked the world when he announced a pause in the higher bilateral tariffs. He also kept a 10% blanket tax on imports while raising levies on China.

The stock market roared to new heights, registering some of the biggest percentage gains since 2008. However, with all the uncertainty, they are now starting to tremble again.

WHIPLASH

Martin Whetton is Westpac's director of financial markets strategy. He has spent 30 years on the markets of Sydney and London.

He said: "The fact that money didn't scramble for U.S. Dollar funding to buy Treasuries or the U.S. Dollar as a safety net is shocking and a stark warning."

On Friday, the 11th session after Trump announced his auto tariffs, fatigue had set in, but little dust was settled. Beijing increased its tariffs against U.S. imports by 125% on Friday.

Stocks dropped, the dollar fell to its lowest level in a decade against the Swiss franc as a safe haven and the talk turned towards whether this period marked the beginning of an end to U.S. financial dominance.

Jack McIntyre is the portfolio manager at Brandywine Global U.S., which manages assets worth almost $60 billion.

"You concentrate on what you know," said he, with an eye to further drops in the dollar, as the U.S. economic slowdown continues and the rest of world may continue selling U.S. asset.

(source: Reuters)