The Cboe Volatility Index jumped yesterday, in its biggest one-day spike in more than four months as concerns continued to grow over trade policy.
The VIX, which uses S&P 500 options to calculate expectations for volatility over the coming 30 days, surged 35%.
Craigs Investment Partners broker Chris Timms said the 35% surge spoke volumes about the weeks ahead.
''Trade tensions are likely to continue dominating global headlines. Markets will remain on edge this week as tensions grow over the tit-for-tat trade dispute between the US and China.''
US tariffs against Chinese imports were due to be enacted in two stages, with the first set to affect $US34billion ($NZ49.3billion) of products from July 6, less than two weeks from now, he said.
If any agreement was to be reached before this, both countries were running out of negotiating time.
Mr Trump also threatened on Friday to slap a 20% tariff on European cars imported into the US, hitting share prices for European vehicle manufacturers such as BMW and Volkswagen.
Global shares extended their sell-off yesterday as investors steered away from riskier assets. The blue chip Dow Jones was down for the ninth out of 10 days.
The NZX was down nearly 80 points at one stage yesterday, before staging a comeback when the ASX opened at noon New Zealand time.
Mr Timms said the NZX followed its usual pattern of taking its lead from overseas closings, particularly in the US, before adjusting to trading in Australia and Asia.
''It appears investors are starting to believe the Trump administration's tariff threats are more than just bluster.''
IG Australia market analyst Kyle Rodda said the new direction in the looming trade war, in which not only physical imports faced imposts, but potentially overseas in investments in the US too, suggested Mr Trump was prepared to push the global economy to the brink to get his way.
The ASX was starting to trade more in line with global markets after last week when it did quite well, he said.
