Asian stock markets plunged on Monday (Apr 7) as fears of a global trade war saw Wall Street futures dive, and investors wagered the mounting risk of recession could see US interest rates cut as early as May.

Japan's Nikkei sank 7.8 per cent to lows last seen in late 2023, while South Korea lost 4.6 per cent.

Futures markets moved swiftly to price in almost five quarter-point cuts in US rates this year, pulling Treasury yields down sharply and hampering the dollar.

The carnage came as White House officials showed no sign of backing away from their sweeping tariff plans, and China declared the markets had spoken on their retaliation through levies on US goods.

President Donald Trump told reporters that markets would have to take their medicine and he would not do a deal with China until the US trade deficit was sorted out.

Investors had thought the loss of trillions of dollars in wealth and the likely body blow to the economy would make Trump reconsider his plans.

"The size and disruptive impact of US trade policies, if sustained, would be sufficient to tip a still healthy US and global expansion into recession," said Bruce Kasman, head of economics at JPMorgan, putting the risk of a downturn at 60 per cent.

"We continue to expect a first Fed easing in June," he added. "However, we now think the Committee cuts at every meeting through January, bringing the top of the funds rate target range down to 3.0 per cent."

S&P 500 futures slid 4.31 per cent in volatile trade, while Nasdaq futures dived 5.45 per cent, adding to last week's almost $6 trillion in market losses.

The gloomier outlook for global growth kept oil prices under heavy pressure, following steep losses last week.

Brent fell US$2.12 to US$63.46 a barrel, while US crude dived US$2.05 to US$59.94 per barrel.

The flight to safe havens saw Treasury futures surge a full point, a very rare move for Asian trade, while Fed fund futures jumped to price in an extra quarter-point rate cut from the Federal Reserve this year.

Markets swung to imply around a 63 per cent chance the Fed could cut as soon as May, even though Chair Jerome Powell on Friday said the central bank was in no hurry on rates.

Yields on 10-year Treasuries dropped 10 basis points to 3.897 per cent amid the general flight from risk assets.