Fiscal Fears and Trade Woes Shake Markets

Global markets faced a turbulent session as concerns over the U.S. fiscal outlook and erratic trade policies took center stage, leading to a drop in both U.S. stocks and the dollar. Long-term Treasury yields steadied near their highest levels in 18 months, reflecting investor apprehension about the country's growing debt burden and impending tax reforms.

The downgrade of the U.S. credit rating by Moody's last week has only exacerbated the situation, leaving the markets in a listless state and fueling a 'Sell America' narrative. This has caused the greenback to hover near a two-week low against other major currencies, and European futures are predicting a lower market opening following a grim session in Asia.

Attention will be focused on forthcoming surveys regarding the overall sector activity in Europe. Meanwhile, investors are exploring alternatives outside the U.S. amid fears of global recession catalyzed by President Trump's unpredictable trade stance, as highlighted by experts like Vis Nayar from Eastspring Investments who advocate for diversification into emerging markets.

(With inputs from agencies.)