From a “garden variety pullback” to “major crisis”, analysts at RBC Capital Markets are war gaming where the Trump tariff volatility could take Wall Street.
It’s a market of extreme volatility. Unsurprisingly, the big question for investors is how far it will go.
Should they buy back on the hope that the bottom of a correction has been reached, or steer clear as a recession or worse sends Wall Street and the ASX far lower this year?
This week was a case in point. The S&P/ASX 200 recorded its biggest fall in five years on Monday, down 4.2 per cent, before its largest rise in two years on Tuesday, closing up 2.3 per cent at 7510 points.
It is a similar story on Wall Street. The S&P 500 swung from a loss of as much as 4.7 per cent to a gain of as much as 3.4 per cent on Monday, the biggest intraday swing since the onset of the COVID-19 in March 2020.
The CBOE Volatility index, known as the fear gauge, is soaring.
Source: https://www.afr.com/markets/equity-markets/the-four-tiers-of-fear-for-investors-in-a-market-meltdown-20250408-p5lq46