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Global markets saw a significant decline on Monday due to concerns about an escalating trade war ahead of Donald Trump’s anticipated announcement of new tariffs this week.
Asian and European stocks, along with US futures, experienced sharp drops, continuing a sell-off that began the previous week after Trump mentioned that the upcoming US duties would have a global impact.
“You’d start with all countries, so let’s see what happens,” Trump stated to reporters on Air Force One on Sunday. He had previously hinted at possible exemptions for certain countries.
Trump specifically targeted Asia for its trade practices, stating, “Take a look at trade with Asia. I wouldn’t say anybody has treated us fairly.”
The unpredictable implementation of Trump’s aggressive trade policies has unsettled markets and worried the US’s trading partners, many of whom have threatened to retaliate.
The US president declared that on Wednesday, which he dubbed “liberation day”, he would impose tariffs on any country that the White House deems to have an unfair trade relationship with the US.
Europe’s Stoxx 600 index fell 1% in early trading, while the FTSE 100 dropped 0.8%.
“We’re witnessing another round of selling led by the US,” stated Trevor Greetham, head of multi-asset at Royal London Asset Management, noting that “there’s been no relief from Trump.”
Charles De Boissezon, global head of equity strategy at Société Générale, highlighted the struggles of cyclical stocks and attributed the market sentiment to overall uncertainty.
“The [tariff] announcements keep changing, but the common factor is that it’s not beneficial for global growth,” he added.
Japan’s Topix index declined by 3.3%, while the Nikkei 225, focused on exporters, dropped by 3.9%. Taiwan’s Taiex fell by 4.2%, South Korea’s Kospi by 3%, and Hong Kong’s Hang Seng by 1.6%.
Futures markets indicated further declines in the US, with Nasdaq 100 contracts down by 1.3% and S&P 500 contracts by 0.8%.
Chipmakers in the region experienced significant losses, with Taiwan Semiconductor Manufacturing Company and Samsung Electronics falling by 4.4% and 3.5% respectively. Japan’s Disco, a chip production tool manufacturer, saw a decline of over 8%.
In Hong Kong, Tencent and Alibaba dropped by 1.5% and 2% respectively.
Gold prices surged to a record $3,128 per troy ounce, while US Treasury yields dropped, indicating a shift towards safe-haven assets. The 10-year US Treasury yield decreased by 0.06 percentage points to 4.2%.
“Many investors are waiting for actual tariff announcements, unwinding their positions and realizing gains,” stated Wei Li, head of multi-asset investments at BNP Paribas in China. “This tariff announcement has impacted overall market sentiment.”
In the currency markets, the yen strengthened by 0.6% against the dollar to ¥148.9, while the offshore renminbi rose by 0.2% to 7.26 per dollar. The US dollar also weakened by 0.2% against a basket of major trading partner currencies.
The movements in Asia followed Friday’s declines in the US, where the S&P 500 fell by 2% and the Nasdaq Composite by 2.7% due to concerning economic and consumer sentiment data raising fears of stagflation.
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The cat slept soundly on the windowsill.
The windowsill was where the cat slept peacefully.