Swiss benchmark index SMI deep in the red in pre-market trading

Last week, the SMI had already lost more than nine percent. The recent double-digit price gains since the beginning of the year have thus been practically wiped out. Now it is likely to give way to a clear minus. The reason for this is the concern that inflation could rise due to the customs dispute and plunge the economy into a recession.

"The risk of recession has increased significantly," comments the broker IG. Numerous strategists, such as those at JPMorgan, are also increasing the probability of an economic downturn in their models.

The broker also indicates further losses for the German Dax and the British FTSE 100 at around 6.35 am. The Dax is expected to fall by more than four percent and the British FTSE 100 by around 2.5 percent. However, losses of between 3 and 5 percent are also expected for US shares.

The stock markets in China also reacted with sharply falling prices. The Shanghai Composite Index fell by more than six percent, Hong Kong's Hang Seng Index by more than ten percent and Japan's Nikkei by almost seven percent. However, the stock exchanges in China were closed on Friday for a public holiday. According to one trader, this could mean that some of the slump there could still be some catching up to do.

In the previous week, Trump had announced major tariff increases. The extent of the all-round blow simply overwhelmed the markets - the first wave of selling across the pond on Thursday. Beijing then had its say on Friday, imposing tariffs of 34% on goods from the USA.