Financial markets hit another wave of sales at the start of trading in Asia on Monday, with investors and economists tackling the rise in the severe economic downturn caused by President Trump's critical new tariffs on imports.
The transaction was very unstable. Japanese stocks fell more than 8%, while South Korea fell by about 5%. In Australia, stock prices fell by more than 6%.
Over the weekend, analysts distributed memos warning that Asia could be particularly vulnerable to the harsh exchange of retaliatory tariffs between China and the US. Many countries in the region, including Japan and South Korea, count both countries as top trading partners.
President Trump said it would double on Sunday evening and not ease tariffs in other countries. He also dismissed concerns that his sudden new tax on imports would lead to higher prices. “I don't think inflation is a big deal,” he told Air Force 1 reporters.
On Friday, China returned to the US with a 34% tariff in the US, fighting back against many American exports with tariffs, matching the 34% tariff Trump had imposed on China last week.
On Monday, Hong Kong and Taiwan's stock benchmarks plummeted about 10% when they began trading. Mainland China's stocks fell by about half that volume.
Technology stocks across Asia are becoming more intense. Taiwanese semiconductor manufacturer, the world's largest chip maker, fell nearly 10%, while Apple's leading contract manufacturer, Foxconn also fell 10%. In Hong Kong, Chinese tech giants Alibaba, Tencent and Xiaomi all fell.
Samsung Electronics, Korea, which manufactures many of its products in Vietnam, fell by 4%. Nintendo, Japan, which delayed pre-orders for sequels to its bestselling Switch handheld video game devices, fell almost 5%. Stocks had fallen by 10% when trade was opened.
The S&P 500 futures fell about 4% on Sunday evening as investors could wager on the index before the official trading in New York began on Monday. In the oil market, prices fell by more than 3%. Last week, we've seen a sudden increase in losses. And the price of copper, considered a wide range of economic indicators, slipped over 5%.
The 10.5% drop in the S&P 500 on Thursday and Friday was the worst two-day decline for the Index since the onset of the 2020 coronavirus pandemic.
The only case of a two-day decline occurred between the 2008 financial crisis and the 1987 stock market crash, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. In dollar terms, more than $5 trillion wiped out by S&P value over the last two days are in an unparalleled position.
What's even more unusual is that last week's sale came directly from presidential policy. So far, Trump has dispelled concerns about market responses and potential economic outcomes, indicating that he has little intention of retreating.
“If they are maintained, the tariff hike announced on April 2 represents a self-harm economic catastrophe for the United States,” Preston Caldwell, a US economist with Morningstar Research Services, said in a blog post Friday.
Trump's historically high tariffs announced on Wednesday have overturned global economic forecasts and uncertainly cleared investors, economists and businessmen.
The CEO has begun to warn consumers that they should expect prices to rise on some food, clothing and other products. Consumers say they intend to keep their spending on high items. Some auto companies have already announced a moratorium on production overseas, as well as unemployment within the country. Bank economists have increased the chances of a recession stricken by the US over the next 12 months. Last week, countries responded with their own tariffs, which accelerated sales in financial markets.
Hedge fund manager Bill Ackman on social media platform X on Sunday supported Trump's attempts to correct global tariffs, but said he begged the president to call a “90-day timeout” on Monday.
Otherwise, he said, “We are heading towards a self-induced economic core winter. We should start diving in.” “The cooler head wins.”
The star sign for British Prime Minister Kiel on Saturday warned that “the world we knew it had left,” retaliated against the US and urged the country not to take part in a full-scale trade war.
The S&P 500 was 17.4% below its peak in February as it entered the bear market, defined as a drop of more than 20% from its recent peak.
The chock-of-tech inventory NASDAQ composite index, which was under pressure as sales accelerated last week, is already in the bare market, which has fallen almost 23% since its December peak. The Russell 2000 index, which is more sensitive to the economic outlook, is above 25% since its November peak.
Still, some investors are cautiously optimistic that a solid economy from the beginning of the year will stimulate the economy by turning its eyes to tax cuts and deregulation, and withstanding the high tariff onslaught before the president can avoid the recession.
Treasury Secretary Scott Bescent said he saw “no reason” expecting a recession on his NBC program Meet the Press on Sunday.
Other analysts warned that damage to the economy will depend on the duration of time that tariffs remain at high levels.
“We're very cautious,” said Stuart Kaiser, City's equity analyst. Even with the decline last week, the market could drop even further, he said, as revenue and economic growth expectations are “well above levels consistent with the announced tariff levels.”
Tony Romm contributed the report.
