Asian stock markets plummeted on Monday following a sharp decline on Wall Street last Friday, triggered by U.S. President Donald Trump’s new tariff increases and China’s retaliatory response. U.S. futures indicated further losses, with the S&P 500 down 2.5%, the Dow Jones Industrial Average falling 2.1%, and the Nasdaq slipping 3.1%.
In Japan, Tokyo’s Nikkei 225 dropped nearly 8% shortly after opening, settling 6% lower at 31,758.28 by midday. A circuit breaker briefly halted trading of Topix futures after a steep fall in U.S. futures. Major Japanese companies like Mizuho Financial Group and Mitsubishi UFJ Financial Group saw significant losses, with their shares down 11.3% and 9.9% respectively, reflecting investor fears over the global economic impact of the trade war.
Chinese markets also followed the downward trend, with Hong Kong’s Hang Seng index plunging 9.4% to 20,703.30 and the Shanghai Composite losing 6.2% to 3,134.98. Tech giants Alibaba and Tencent experienced sharp declines, falling 10% and 9.4% respectively.
In South Korea, the Kospi index fell 4.1% to 2,363.82, while Australia’s S&P/ASX 200 dropped 3.8% to 7,377.70, recovering slightly from an earlier 6% loss. Oil prices also suffered, with U.S. crude down 4% to $59.49 per barrel and Brent crude falling $2.25 to $63.33 per barrel.
The U.S. dollar weakened slightly against the Japanese yen, falling to 146.70 from 146.94, while the euro slipped to $1.0926 from $1.0962.
The previous Friday marked Wall Street’s worst crisis since the COVID-19 pandemic, with the S&P 500 losing 6%, the Dow falling 5.5%, and the Nasdaq dropping 5.8%. Market experts predict continued volatility, citing the unlikely prospect of a quick resolution to the U.S.-China trade war.
Nathan Thooft, Chief Investment Officer at Manulife Investment Management, warned that more countries are likely to impose retaliatory tariffs, prolonging negotiations and market uncertainty. The ongoing trade tensions have raised fears of a global recession, with the S&P 500 down 17.4% from its February peak.
The U.S. administration remains firm on its tariff policies, with President Trump suggesting that the long-term benefits outweigh the short-term pain for American consumers. White House trade adviser Peter Navarro remained optimistic, claiming that the administration’s approach would eventually lead to a significant stock market boom.
The Federal Reserve could potentially soften the economic blow by lowering interest rates, but Fed Chair Jerome Powell cautioned that such moves could fuel inflation. The future of the markets will heavily depend on the duration of the tariffs and the nature of retaliatory measures from other countries.