In the US, stock futures fell 1500 points on Sunday local time as markets readied for a rough day of trading on Monday. Photo: AFP / NZX
Share markets around the world are reeling from the US's introduction of sweeping tariffs.
New Zealand shares were down just under 3 percent around midday, and the New Zealand and Australian dollar have both fallen.
In the US, stock futures fell 1500 points on Sunday local time as markets readied for a rough day of trading on Monday.
The tech-heavy Nasdaq has been particularly hard hit.
But while last week was the worst for markets since the pandemic hit in March 2020, commentators say there are some key differences this time around.
Morningstar data director Greg Bunkall said during the March 2020 covid-19 downturn, the MSCI World Index fell 34 percent in US dollar terms, and 26 percent in New Zealand dollars. The US stock market lost nearly 8 percent in one day but recovered in four months.
That compares to the global financial crisis, where between October 2007 and March 2009, it was down 56 percent in US dollars and 34 percent in NZ.
Since 2 April, it has dropped 9 percent in USD and 13 percent in NZD.
Pie Funds founder and chief investment officer Mike Taylor said the difference between the current downturn and covid-19 or the GFC was that "the market rout can stop any time".
"We just need some common sense in the White House - it's a complete own goal. The longer this goes on unchecked, it can become a self-fulfilling prophecy. Selling begets more selling; falling asset prices lead to a feedback loop."
He said the market was falling to factor in the expectation of a recession, compared to the forecast a month ago for 3 percent economic growth.
But he said the market was starting to look very oversold on a number of metrics, which had been historically consistent with either a market bottom or a big bounce.
Dean Anderson, founder of Kernel Wealth, agreed the tariff sell-off was a "purely self inflicted policy decision".
"At the start of 2025, the US economy was strong and now the question remains how much damage is Trump willing to do and will he actually take an off-ramp by negotiating down tariffs with key allied trading partners.
"This rapid change of world order is creating unease, with the Vix index [a measure of volatility] jumping over 50 percent and now back to levels seen in March 2020, albeit still down from those peaks.
"In the GFC, you saw the Fed lower rates from 5.25 percent down to a virtual zero. This time, the Fed (US Federal Reserve) is holding steady, highlighting the risks of rising inflation from Trump's tariffs. Rising inflation would put pressure to raise rates, a double whammy for US consumers.
With Trump always needing to be a winner, we wait to see which group has the greatest influence on his thinking - the "yes man" tariff hawks in office, or the big donors who are feeling the brunt of the policies and the personal financial loss as a result."
Morningstar analyst Emelia Frederick earlier looked at the history of stock market crashes and said they showed that people who did not panic and sell would be rewarded in the long run - but it could sometimes take years for a market to recover.
She said $1 invested in a hypothetical US stock market in 1871 would have grown to $31,255 by the end of January.
But the Great Depression, for example, brought a 79 percent drop. Someone who invested $100 in 1929 would have seen it drop to $21 by May 1932. The market regained its 1929 high in November 1936 but then started dropping again in February 1937. It did not fully recover until 1945.
Kiwibank economists said Trump's tariffs would take the global average rate to the highest level since 1906.
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