LONDON (Reuters) - Fears over slowing global growth have resurfaced in financial markets, fueled by disappointing U.S. economic indicators and escalating trade disputes that threaten consumer confidence and business activity.

While most economists still don’t foresee an outright U.S. recession—thanks to the economy’s underlying strength—recent figures have unsettled investors. The latest move by President Donald Trump to impose 25% tariffs on Mexico and Canada has only deepened concerns about a potential economic slowdown.

The shift in sentiment is evident across multiple asset classes. Oil prices have plunged to their lowest levels since October, stock markets from Wall Street to Tokyo are pulling back from recent peaks, and two-year U.S. Treasury yields have dropped sharply as bond traders bet on possible Federal Reserve rate cuts.

"Confidence is the lifeblood of any economy, and right now it's taking a serious hit," said Francois Savary, Chief Investment Officer at Genvil Wealth Management, pointing to weakening business and consumer sentiment in the U.S. "We're not calling for a recession yet, but we've reduced our exposure to U.S. equities as a precaution."

Recent data paints a concerning picture: January saw the steepest drop in U.S. consumer confidence in three-and-a-half years, retail sales suffered their worst decline in nearly two years, and Monday’s manufacturing report revealed sharp contractions in new orders and hiring.

"A full-blown recession isn't our base case, but we do expect modest growth deceleration," noted Joost van Leender, Senior Investment Strategist at Van Lanschot Kempen Investment Management in Amsterdam. He attributed much of the uncertainty among consumers to what he called "chaotic" policy shifts from Washington.

Van Leender revealed his firm had scaled back U.S. stock holdings late last month while increasing positions in Treasuries—a defensive play anticipating lower yields amid slowing economic momentum.

In a stark reversal of fortune, the Atlanta Fed's GDPNow tracker swung dramatically this week—plunging from projecting 2.3% annualized growth last week to forecasting a 2.8% contraction on Monday.

Market analysts caution that temporary factors like harsh winter weather may be distorting some recent data points (including import figures affecting GDP models). However they warn that trade tensions are rapidly redirecting market focus away from inflation worries toward growth risks stemming from protectionist measures.

China has retaliated against increased U.S tariffs by announcing additional duties of 10-15% on select American goods effective March 10th Meanwhile European automakers took heavy losses Tuesday following Trump's surprise tariffs targeting vehicles assembled Mexico Canada key production hubs serving American consumers