By Wayne Cole

SYDNEY (Reuters) - Asian financial markets are set to experience a tumultuous beginning on Monday as Wall Street futures suffered significant declines, raising concerns about the escalating risk of a U.S. recession. Analysts speculate that the Federal Reserve may consider cutting interest rates as early as May, amidst growing fears over economic stability.

In the pre-market trading, S&P 500 futures plummeted by 3.9% during a particularly volatile session. Similarly, futures for the Nasdaq index experienced an alarming drop of 4.8%. This downturn added to the substantial losses incurred last week, which amounted to nearly $6 trillion, largely driven by apprehensions regarding the repercussions of a potential global trade war.

The negative sentiment extended to Asian markets as well. Nikkei futures in Japan fell nearly 4%, reaching a level of 31,080, indicating that the cash index could drop by as much as 3,000 points. The Nikkei had closed at 33,780 on Friday, illustrating the severity of the situation.

This market carnage coincided with the U.S. government officials showing no inclination to retract their tariff plans, leading China to respond by indicating that the markets had expressed their views through retaliatory tariffs on American products.

Notably, the rush to safe-haven assets witnessed a remarkable surge in Treasury futures, which surged a full point—a rare occurrence during Asian trading hours. Additionally, futures for Fed funds reflected a growing expectation for an additional quarter-point cut by the Federal Reserve within the year.

The markets implied that there is approximately a 70% likelihood of the Fed implementing a rate cut as soon as May. This comes despite Federal Reserve Chair Jerome Powell's statement on Friday asserting that the central bank is not in a rush to adjust interest rates.

Bruce Kasman, JPMorgan's head of economics, commented on the implications of sustained U.S. trade policies, stating, "The size and disruptive impact of U.S. trade policies, if maintained, would be enough to bring even a currently healthy U.S. and global expansion into a recession." He emphasized that the probability of an economic downturn is now around 60%.

Kasman further noted, "We continue to expect the first Federal Reserve easing to occur in June. However, it is now our belief that the Committee will reduce rates at every meeting until January, ultimately lowering the maximum target range for the funds rate to 3.0%." This pessimistic forecast for global economic growth has exerted considerable pressure on oil prices, which are still reeling from last week's steep declines.

As a result, Brent crude oil prices fell by $2.05, settling at $63.53 per barrel, while U.S. crude experienced a similar decline, dropping $2.07 to $59.92 per barrel. The selloff also affected precious metals, with gold prices easing by 0.6% to $3,018 per ounce, reflecting the widespread market apprehension.

(Editing by Kim Coghill)