S&P 500 and dow close lower amid market turmoil over tariffs and inflation concerns

The Reserve Bank of India‘s six-member Monetary Policy Committee is meeting today for the first time in the new financial year. Many in the market expect the central bank to announce a 25 basis points cut in the key repo rate to support growth. While most are betting on a small cut, some are hoping the RBI might surprise with a deeper reduction.

“Crude oil prices suffered a steep decline last week, marking the largest weekly drop since October 2023. The sharp fall followed the U.S. announcement of reciprocal trade tariffs on its trade partners, prompting a retaliatory 34% tariff from China on U.S. goods. These heightened trade tensions triggered a sell-off in energy markets, resulting in crude oil’s most significant weekly drop in three years. Adding to the downward pressure, OPEC+ unexpectedly agreed to increase output to 411,000 barrels per day from May, a substantial jump from the previously planned 135,000 barrels,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Japanese stock futures were briefly halted on Monday morning after triggering a circuit breaker, a rare move meant to cool panic selling. The suspension followed a sharp sell-off in U.S. markets, with Dow Jones and S&P 500 futures tumbling over 4% amid growing fears of a ‘Black Monday’ scenario. In early Tokyo trade, the Nikkei 225 dropped 7.35%, adding to Friday’s 2.75% fall. South Korea’s Kospi also joined the global slump, falling 4.8% in early trade.

“Gift Nifty is signaling a weak start for Indian markets, mirroring Friday’s global sell-off after Trump’s aggressive tariff move triggered panic on Wall Street. Adding to the pressure, Fed Chair Powell paused rate cuts amid inflation concerns, and China retaliated with a 34% tariff on U.S. goods. With key support for Nifty seen at 21,281, traders brace for further downside. Ahead of RBI’s rate decision on April 9 and TCS’s earnings on April 10, the mood remains cautious. Sell strategies are advised for Nifty, Bank Nifty, and stocks like COAL INDIA, M&M FINANCIAL, and M&M on intraday strength,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Oil prices continued to fall on Monday, dropping more than 3% as growing tensions between the US and China raised fears of a global recession. This has sparked concerns that demand for crude could weaken further. Brent crude slipped by $2.28 to trade at $63.30 a barrel, while US West Texas Intermediate (WTI) fell by $2.20 to $59.79. Both hit their lowest point since April 2021 during the session, extending last week’s losses.

“Overall, we expect that the impact of reciprocal tariffs on India will be limited on a national basis as India’s exports in the six most vulnerable sectors amount to only 1.1% of India’s GDP. There is the possibility that the impact could further be reduced as India is in the process of negotiating a bilateral agreement with the US,” said Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal Financial Services.

While investors closely track the market’s reaction to US President Trump’s tariff moves, attention will also be on several individual stocks. Tata Motors, IIFL Finance, Delhivery, Indian Bank, IndusInd Bank, Tata Steel, Yes Bank, Aavas Financiers, and Jubilant FoodWorks are expected to be in focus today, driven by company-specific developments and broader market cues.

Mainland China’s CSI 300 index took a heavy hit on Monday, falling 5.41% as global market jitters deepened. The index, which tracks the performance of the top 300 stocks on the Shanghai and Shenzhen stock exchanges, opened at 3,675.20 and briefly touched a high of 3,707.78 before plunging to a low of 3,570.11.

The Indian IT shares may remain under pressure in Monday’s trade following the huge sell-off in Asian markets as well as US futures plunged on Sunday due to tariff turmoil. The tech stocks for the last two sessions were falling on the back of an economic slowdown in the US due to recessionary fears. The tech stocks have also been seeing low growth in large deal wins, another worrisome point.

“Higher taxes on consumption mean either consumers pay more or manufacturers, exporters absorb the cost if they have higher margins. If not, the tariff burden passes on to the consumer translating to higher prices and slower growth in the US. From a manufacturers’ point of view, especially those reliant on US markets, this is a double whammy as both sales and margins could come under pressure. To counter growth challenges in the US, we could see higher Government spending in Europe, China and to some extent in India,” said Anand Shah, CIO – PMS and AIF Investments, ICICI Prudential AMC.

As global markets faced a heavy sell-off over the weekend, CNBC’s Jim Cramer responding to the sharp drop in US stock futures, Cramer said, “I’m not going to panic.”

The Chinese markets cracked 10% as soon as it opened on Monday. The Shanghai Composite fell 5.89% to 3,145.01. The Taiwan Weighted Index was trading 9.6% lower at 19,249.

The Hang Seng Index crashed by 2,315 points to 20,533.85 on Monday, plunging over 10% in one of its steepest intraday declines in recent months. The sharp fall reflects deepening investor anxiety over global trade tensions, rising inflation worries, and a broader sell-off across global markets.

The GIFT Nifty, which gives an early sense of how Indian stock markets might open, dropped by as much as 900 points in early trade on Monday. This sharp fall suggests that the Sensex and Nifty 50 could start the day near their March 4 lows.

As global markets reel from a sharp sell-off, US President Donald Trump addressed the situation, saying he isn’t trying to push stocks or any asset class lower. Speaking to reporters on Air Force One, Trump said, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”

“While we did keep on weighing the prospects of a large downside all through last week, we felt 23,050-22,960 or the 22,750-522 bands to defend sharp slippages. We had also taken cues from the fact that VIX remained muted despite the declines, and even rose just 1.1% to close at 13.75 on Friday, on a day when Nifty fell 1.49%. In short, the present structure appeared hardly primed for a collapse per se,” said Anand James.

Read more: Market Watchlist: IT Breakdown, FMCG Turnaround? Is a COVID-like breakdown likely?

“The overall impact of the tariffs on the Indian economy and markets is expected to be minimal. Over time India may even benefit. The recent fall in Crude prices (from $75 to $60 per bbl) and US 10-year yields (from 4.4% to 4%) will also work to India’s advantage,” said Prashant Jain, Founder and CIO. Furthermore, he added, “these tariffs and any counter-measures by other nations will create uncertainty, which is detrimental for both business investments and economic growth.”

Also read: Prashant Jain: Tariff impact minimal; favour large caps, ‘big no’ for small, midcaps

“Last week, we lined up the conditions for the Nifty IT Index making a U-turn. Unfortunately, such attempts met rejection trades and bore the maximum brunt of the heavy selling that took root in the US last week, a theme that has been playing out for some time,” said Anand James, Chief Market Strategist at Geojit Financial Services.

Read more: Market Watchlist: IT Breakdown, FMCG Turnaround? Is a COVID-like breakdown likely?

As fears of a global trade war deepen, investors are rushing to safer assets and China’s government bonds are seeing the impact. The yield on China’s 10-year sovereign bonds dropped sharply by 10 basis points to 1.62%, nearing a record low.

US stock futures point to a rough start to the week. Dow futures have dropped more than 1,200 points, signaling heavy losses ahead. Futures tied to the S&P 500 are down by nearly 240 points, while the tech-heavy Nasdaq futures have slid close to 1,000 points.

Asian markets started the week with steep losses as fears of a global trade war rattled investors. Japan led the decline, with the Nikkei 225 dropping over 8% and the broader Topix down nearly 9%, triggering a halt in futures trading due to circuit breakers. South Korea’s Kospi fell more than 4% at the open, while Australia’s ASX 200 slumped over 6%, officially entering correction territory after falling 11% from its recent high.