By Wayne Cole

SYDNEY (Reuters) -World share markets were in a tailspin on Monday after U.S. President Donald Trump said tariffs would essentially cover all countries, stoking worries a global trade war could lead to recession.

Trump’s comments to reporters on Air Force One seemed to dash hopes the levies would be more limited. Trump is due to receive tariff recommendations on Tuesday and announce initial levels on Wednesday, followed by auto tariffs the day after.

Seeking any safe harbour from the trade storm, investors piled into sovereign bonds and the Japanese yen, while lifting gold prices to another all-time high.

S&P 500 futures lost 0.8%, extending Friday’s rout, while Nasdaq futures shed 1.4%.

EUROSTOXX 50 futures fell 0.8%, while FTSE futures and DAX futures were both down 0.5%.

The European Union was ready to respond with tariffs of its own, German Chancellor Olaf Scholz said on Sunday, but there were also reports the block was preparing a list of concessions to offer to Trump.

“For the first time in years, we find ourselves genuinely worried about risk assets,” said Ajay Rajadhyaksha, head of rates markets at Barclays.

“If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies,” he added. “For the first time in many quarters, we favour core fixed income over global equities.”

Japan’s Nikkei led the rout in Asia, losing an eye-watering 4.1% to a six-month low as automaker stocks continued to suffer fallout from Trump’s talk of 25% tariffs on imported cars.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.9% and South Korea 3.0%.

Chinese blue chips fell 1.0% as a survey showed manufacturing activity inched higher in March, much as analysts expected.

THAT “R” WORD

Many economists are worried that tariffs will hit the U.S. economy hard, even while limiting the Federal Reserve’s scope to cut rates by also lifting inflation in the short term.

“Recession risks have become elevated – to a 40% probability – on concerns that aggressive U.S. policies hit business and household sentiment,” warned Bruce Kasman, chief economist at JPMorgan.

“With the latest tariff increases set to push U.S. core inflation above 4% next quarter, a household sector with a healthy balance will need to show a willingness to lower its saving rate to cushion this blow.”

Analysts at Goldman Sachs now saw a 35% chance of a U.S. recession, up from 20% previously, saying they expected Trump to announce reciprocal tariffs that average 15% across all U.S. trading partners on April 2.