Asian stock markets are experiencing a sharp decline, resulting from the ongoing impact of US President Donald Trump’s tariffs. Major indexes in Shanghai, Tokyo, Sydney, and Hong Kong witnessed significant plunges upon opening on Monday. This decline can be attributed to the direct effects of the tariffs on Asian countries and territories, which heavily rely on manufacturing and exporting goods globally. Moreover, concerns about a potential global trade war triggering a slowdown or recession in the world’s largest economy further exacerbate the situation.
By midday, Japan’s Nikkei 225 index had dropped by 6%, the ASX 200 in Australia decreased by 4%, and South Korea’s Kospi fell by 4.7%. The slumps in mainland China, Hong Kong, and Taiwan were exacerbated as investors caught up with the substantial falls in other markets on Friday, due to public holidays. The Shanghai Composite declined by more than 6%, while the Hang Seng and Taiwan Weighted Index plummeted by around 10%.
Julia Lee, Head of FTSE Russell (a subsidiary of the London Stock Exchange Group), commented that tariffs are contributing to expectations of inflation and recession. Goldman Sachs has increased its estimation of a US recession within the next 12 months to 45%, up from a previous estimate of 35%. Other Wall Street firms have also revised their recession forecasts in light of Trump’s tariff announcement. JPMorgan now sees a 60% chance of a US and global recession.
A significant slowdown in the US economy would have major implications for Asian exports, as the US is a significant market for goods from the region. Qian Wang, Asia Pacific chief economist at investment firm Vanguard, stated that Asia is bearing the brunt of the US tariff hike. While negotiations may provide some relief, a new regime of higher tariffs is likely to persist.
Several countries, including Vietnam and Bangladesh, have become highly reliant on the US as an export market. Trump’s announcement included a 46% tariff on Vietnam and a 37% tariff on Bangladesh. Many major US brands, such as Nike and Lululemon, produce goods in Vietnam. Bangladesh exports approximately $8.4bn worth of garments to the US annually. Frank Lavin, a former Undersecretary for International Trade at the US Department of Commerce, stated that Asia is likely to feel a disproportionate impact due to its significant exports to the US.
On Friday, the global stock market turmoil deepened after China retaliated against the tariffs announced by Trump. The three major US stock indexes fell by over 5%, with the S&P 500 plummeting by nearly 6%, marking the worst week for the US stock market since 2020. In the UK, the FTSE 100 index declined by almost 5%—its steepest fall in five years—while exchanges in Germany and France experienced similar declines.
Ms. Lee also emphasized that the global stock market rout is expected to continue, citing lower futures trading in the US indicating another challenging session for Wall Street.
Since Trump announced sweeping new 10% import taxes on goods from various countries, including China, the European Union, and Vietnam, global stock markets have lost trillions in value.
Source: https://www.bbc.com/news/articles/c934qzd094wo
