European stocks steady after US markets plunge
A sell-off in global shares eased in Europe on Tuesday following a sharp fall in US stocks that came as investors raised concerns about the negative economic impact of President Donald Trump's tariffs.
It followed the president saying in a TV interview that the world's biggest economy was in a "period of transition", when asked about suggestions of a potential recession.
Since those remarks were broadcast on Sunday, top Trump officials and advisers have sought to calm investor fears.
The US S&P 500 share index fell nearly 3% on Monday, but in Europe most of the major markets opened little changed.
In a Fox News interview broadcast at the weekend but recorded on Thursday, Trump appeared to acknowledge concerns about the economy.
"I hate to predict things like that," he said. "There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing."
Charu Chanana, an investment strategist at investment bank Saxo, told the BBC: "The previous notion of Trump being a stock market president is being re-evaluated."
On Monday in New York, the S&P 500, which tracks the biggest companies listed in the US, ended the trading day 2.7% lower, while the Dow Jones Industrial Average dropped 2%.
The tech-heavy Nasdaq share index was hit particularly hard, sinking 4%.
Tesla shares fell by 15.4%, while artificial intelligence (AI) chip giant Nvidia was down more than 5%. Other major tech stocks including Meta, Amazon and Alphabet also fell sharply.
On Tuesday, Asian stocks fell sharply at first before recovering. Japan's Nikkei 225 closed down 0.6% and South Korea's Kospi ended 1.3% lower.
The dollar slid further against the pound and the euro on Tuesday, having fallen sharply since the beginning of the month.
However, there was little sign of the turbulence spilling into Europe. While the FTSE 100 index, which tracks the biggest companies listed in the UK, dipped 0.1%, Germany's Dax index rose 0.4% and the French Cac 40 climbed 0.2%.
"Trump is keeping political leaders guessing regarding his next moves on tariffs, but the problem is that he's also keeping investors guessing and that's reflected in the dire market mood," said Tim Waterer, chief market analyst at financial services firm KCM Trade.
"Whilst recession talk may be premature, the mere prospect of this coming to fruition is enough to put traders into a defensive mindset."
Ruth Foxe-Blader of Foxe Capital told the BBC's Today programme that Monday had been a "very difficult and chaotic day for the stock market in the US" and "the markets hate chaos".
She said investors were reacting to Trump's policies - but also selling tech stocks they felt were overvalued.
Lindsay James, an investment strategist at Quilter Investors, said the drop in Tesla share price "comes down to hard numbers" with new orders halving in Europe and China over the past year.
She added there was "an element" of Elon Musk's politics "having a brand impact", but "there's other angles" including competition from Chinese electric vehicle manufacturers and investors "getting more worried about an economic slowdown".
After trading closed on Monday, a White House official told reporters: "We're seeing a strong divergence between [the] animal spirits of the stock market and what we're actually seeing unfold from businesses and business leaders."
They added: "The latter is obviously more meaningful than the former on what's in store for the economy in the medium to long term."
In a separate statement later in the day, White House spokesman Kush Desai said "industry leaders" had responded to Trump's agenda, including tariffs, "with trillions in investment commitments".
Last week, the main US markets fell back to the level seen before Trump's election victory last November, which had initially been welcomed by investors due to hopes of tax cuts and lighter regulation.
Investors fear Trump's tariffs - which are taxes on goods applied as they enter the country - will lead to higher prices and dent growth in the world's largest economy.
The president introduced the measures after accusing China, Mexico and Canada of not doing enough to end the flow of illegal drugs and migrants into the US. The three countries have rejected the accusations.
Economist Mohamed El-Erian said investors were initially optimistic about Trump's plans for de-regulation and lower taxes, while under-estimating the likelihood of a trade war.
He said the recent falls in the stock market, which started last week, reflect the adjustment of those bets.
"It's a complete change in what the market expected," he added, noting that investors are also responding to signs that businesses and households are starting to hold off on spending due to uncertainty, which could hurt economic growth.
But Kevin Hassett, an economic adviser to President Trump, has pushed back against those projecting this bleak outlook.
In an interview with CNBC, Hassett said there were many reasons to be optimistic about the US economy and that that tariffs imposed on Canada, Mexico and China were already bringing manufacturing and jobs to the United States.
"There are a lot of reasons to be extremely bullish about the economy going forward," he said.
He admitted there were some "blips in the data" for this quarter, which he pinned on the timing of Trump's tariffs and the "Biden inheritance".