Asian stock markets experienced a dramatic sell-off on Monday, intensifying a global market downturn fueled by escalating trade tensions between the U.S. and China. Japan’s Nikkei 225 index closed down 7.9%, while Hong Kong’s Hang Seng plummeted nearly 12%, and the Shanghai Composite fell over 7%. The widespread losses reflect growing fears of a damaging trade war and its potential to trigger a global economic slowdown.
The market turmoil was triggered by President Trump’s implementation of new tariffs and China’s forceful retaliation, which included imposing 34% tariffs on all U.S. goods. Analysts point to “forced liquidations” and “full-blown panic” as trading volumes surged.
Tech giants like Sony, Alibaba, and Tencent saw significant declines, along with major automakers Toyota and Honda. Taiwan’s Taiex index also suffered a steep 9.7% drop, with key exporters like TSMC and Foxconn triggering circuit breakers.
“Washington’s shock decision to impose a 34% tariff on Chinese goods dealt a direct blow to core export sectors like semiconductors and EVs (electric vehicles), triggering a sharp and broad-based repricing across Asian markets,” stated Dilin Wu, a research strategist at Pepperstone.
The market downturn follows a brutal two-day stretch on Wall Street, where over $5.4 trillion in market value was wiped out. U.S. stock futures continued to decline Sunday evening, indicating further losses.
China, through its state-run media, has signaled its resolve to withstand U.S. pressure, stating it has “plenty of countermeasures at hand.” Ronald Temple, chief market strategist at Lazard, predicts further retaliation from other countries, exacerbating the economic damage.
Even traditionally safe-haven assets like gold saw sell-offs, and oil prices continued to slide. The S&P 500 is on the verge of a bear market, raising concerns about a broader economic downturn.
Billionaire investor Bill Ackman warned that Trump is “losing the confidence of business leaders around the globe” and called for a “timeout” to avoid an “economic nuclear war.”
President Trump, while acknowledging market volatility, defended his trade policies, stating he aims to address trade deficits with China and the European Union. He also revealed that he had received calls from technology executives and world leaders over the weekend regarding the tariffs.
Japan and Taiwan have expressed their intent to negotiate with the U.S. to reduce tariffs and address trade imbalances. However, economists at Barclays have adopted a “cautious view” on the success of these negotiations and have begun revising economic growth forecasts for the region.
Related Readings:
