sian stocks plunged Monday, following Friday’s dramatic sell-off on Wall Street amid escalating trade tensions sparked by U.S. President Donald Trump’s tariff increases and Beijing’s retaliation.
U.S. futures pointed to continued losses. Futures for the S&P 500 declined 2.5%, the Dow Jones Industrial Average futures dropped 2.1%, and Nasdaq futures slid 3.1%.
In Tokyo, the Nikkei 225 fell nearly 8% shortly after markets opened, and by midday, the index was down 6% at 31,758.28. A circuit breaker was briefly triggered, halting trading in Topix futures after a sharp drop in U.S. futures.
Financial stocks were among the hardest hit. Shares in Mizuho Financial Group plunged 11.3%, while Mitsubishi UFJ Financial Group’s stock fell 9.9%, as investors grew increasingly anxious about the potential global economic impact of the trade conflict.
Chinese markets, which often move independently of global trends, also experienced steep losses. Hong Kong’s Hang Seng Index dropped 9.4% to 20,703.30, and the Shanghai Composite Index shed 6.2% to close at 3,134.98.
Shares in tech giants also took a hit, with Alibaba Group Holdings tumbling 10% and Tencent Holdings falling 9.4%.
South Korea’s Kospi declined 4.1% to 2,363.82, and Australia’s S&P/ASX 200 lost 3.8% to 7,377.70, after paring back from earlier losses exceeding 6%.
Oil prices continued their descent, with U.S. benchmark crude dropping 4%, or $2.50, to $59.49 per barrel. Brent crude, the international standard, declined $2.25 to $63.33 a barrel.
In currency markets, the U.S. dollar weakened to 146.70 Japanese yen from 146.94 yen. The yen, typically considered a safe haven in times of financial distress, gained ground. The euro eased to $1.0926 from $1.0962.
Friday marked Wall Street’s most severe downturn since the COVID-19 crisis. The S&P 500 dropped 6%, the Dow fell 5.5%, and the Nasdaq Composite declined 5.8%.
Analysts anticipate heightened market volatility and further dramatic price movements in the near term, as hopes for a quick resolution to the trade dispute remain slim.
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Nathan Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management, warned that more countries are likely to introduce retaliatory tariffs against the U.S. Given the number of parties involved, “we believe it will take significant time to navigate through the upcoming negotiations.”
He added, “Our overall assessment is that market uncertainty and volatility are likely to continue for an extended period.”
China's response to Trump’s latest tariff escalation intensified global market losses. Despite a surprisingly strong U.S. jobs report—typically the month's main economic highlight—it wasn’t enough to stop the market slide.
So far, the trade war has yielded few if any winners in the financial markets. Beijing's announcement of retaliatory tariffs—including a 34% tariff on all U.S. imports starting April 10—fueled a fresh wave of selling across global exchanges.
As the world's two largest economies, the U.S. and China are central to global economic stability. A major concern is that a prolonged trade war could tip the world into a recession, which may push equity prices even lower. The S&P 500 has already fallen 17.4% from its record high in February.
Trump acknowledged that Americans may experience “some pain” due to tariffs but maintained that the long-term objectives—such as restoring manufacturing jobs to the U.S.—justify the cost. He appeared indifferent to the significant financial losses faced by investors.
From his Mar-a-Lago resort in Florida, Trump headed to his nearby golf course after posting on social media, “THIS IS A GREAT TIME TO GET RICH.”
The Federal Reserve could potentially soften the economic impact of tariffs by lowering interest rates, which generally encourages spending and borrowing. However, Fed Chair Jerome Powell cautioned on Friday that tariffs may drive up inflation expectations, and rate cuts could further stoke price increases.
“Our responsibility is to keep long-term inflation expectations well anchored and to ensure that a one-time rise in price levels does not evolve into persistent inflation,” Powell said.
Much depends on how long Trump’s tariffs remain in place and how other countries respond. Some on Wall Street are still hopeful Trump might reduce tariffs if he can secure favourable outcomes through negotiations.
Stuart Kaiser, head of U.S. equity strategy at Citi, noted in a Sunday briefing to clients that current earnings forecasts and stock valuations do not fully account for the trade war’s potential effects. “There’s still significant room for further decline despite the recent sharp pullback,” he said.
There was no indication from the Trump administration that it intends to ease the tariff policy that has wiped out trillions in market value.
In an interview on Fox News Channel’s “Sunday Morning Futures,” White House trade adviser Peter Navarro reiterated the president’s position, insisting investors should remain calm. He claimed that the administration’s trade strategy would ultimately lead to “the biggest boom in the stock market we have ever seen.”
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“People just need to stay put, let the market find its bottom, and not get rattled by the panic driven by the media,” Navarro said.