Key words
- Japan’s Nikkei 225 drops by 6.3 per cent
- Hong Kong’s Hang Seng dips by 9.8 per cent
- Selling in Asia was across the board
- No sector remained unharmed by savage selling
ISLAMABAD: Stock markets plunged in Asia on Monday after China hammered the United States with its own hefty tariffs, ramping up a trade war that many fear could spark a recession.
Japan’s Nikkei 225 dropped by 6.3 per cent and Hong Kong’s Hang Seng by 9.8 per cent, with Hong Kong-listed shares of UK banks HSBC and Standard Charted also plunging, BBC reported.
Earlier, US stock market futures were sharply down, indicating that Wall Street shares would fall when they open.
Australian stock index plummeted 6 per cent on Monday at opening. Similarly, Taiwan’s stocks dived 9.8 per cent as traders reacted to US President Donald Trump’s sweeping tariffs that triggered a massive selloff on world markets last week.
The Taiex, the weighted index on the Taiwan Stock Exchange, plunged 9.8 per cent at the open, as trading resumed following a long weekend.
Moreover, Singapore stocks plunged more than 7 per cent on tariff fears.
Worst day for equities
Trading floors were overcome by a wave of selling as investors fled to the hills on the worst day for equities since the pandemic, with Hong Kong shedding more than 10 per cent, Tokyo diving eight percent, and Taipei more than nine per cent.
Futures for Wall Street’s markets were also taking another hammering, while concerns about the impact on demand also saw commodities slump.
Donald Trump sparked a market meltdown last week when he unveiled sweeping tariffs against US trading partners for what he says was years of being ripped off and claimed that governments were lining up to cut deals with Washington.
But after Asian markets closed on Friday, China said it would impose retaliatory levies of 34 per cent on all US goods from April 10.
Dashed hopes
According to AFP, China also imposed export controls on seven rare earth elements, including gadolinium — commonly used in MRIs — and yttrium, utilised in consumer electronics.
Hopes that the US president would rethink his policy in light of the turmoil were dashed Sunday when he said he would not make a deal with other countries unless trade deficits were solved.
He denied that he was intentionally engineering a selloff and insisted he could not foresee market reactions.
“Sometimes you have to take medicine to fix something,” he said of the ructions that have wiped trillions of dollars off company valuations.
No sector spared
The selling in Asia was across the board, with no sector unharmed by the savage selling — tech firms, car makers, banks, casinos and energy firms all felt the pain as investors abandoned riskier assets.
Among the biggest losers, Chinese ecommerce titans Alibaba and JD.com tanked more than 11 percent, while Japanese tech investment giant SoftBank dived more than 10 percent.
Shanghai shed more than five percent and Singapore more than six percent, while Seoul gave up more than five percent triggering a so-called sidecar mechanism — for the first time in eight months — that briefly halted some trading.
Concerns about demand saw oil prices sink more than three percent Monday, having dropped around seven percent Friday. Both main contracts are now sitting at their lowest levels since 2021. Copper — a vital component for energy storage, electric vehicles, solar panels and wind turbines — also extended losses.
“The market is in free-fall mode again, punching through floors,” said Stephen Innes at SPI Asset Management. “Trump’s team isn’t blinking. The tariffs are being treated as a victory lap, not a bargaining chip.”
The losses followed another day of carnage on Wall Street on Friday, where all three main indexes fell almost six percent.
Risk of higher unemployment
That came after Federal Reserve boss Jerome Powell said US tariffs will likely cause inflation to rise and growth to slow and warned of an “elevated” risk of higher unemployment.
The measures by Trump are likely to give US central bankers a headache as they try to balance the need for interest rate cuts to support the economy with the need to keep a lid on prices.
His comments came after Trump had insisted “my policies will never change” and urged the Fed to cut rates.
“Powell’s hands are tied,” said Innes. “He’s acknowledged the obvious — that tariffs are inflationary and recessionary — but he’s not signalling a rescue.
“And that’s the problem. This time, the Fed’s inflation mandate is forcing it to keep the safety net rolled up while asset prices get torched.”
Tim Waterer, chief market analyst at KCM Trade, said: “Traders are nervously watching the two biggest economies going toe to toe on tariffs and are fearing that both could receive knockout blows from a prolonged economic fight.
“Neither the US nor China are backing down when it comes to slapping new tariffs on each other and in this escalatory environment it’s not surprising to see that risk assets are being avoided like the plague.”
PSX halted
In the backdrop of major selling pressure, the Pakistan Stock Exchange (PSX) has halted as the KSE30 index bled by 5 per cent while the benchmark KSE-100 Index plunged by 6,287.22 points or 5.29 per cent to trade at 112,504.44 at 11:57 AM.
This drop mirrored the ongoing global market turbulence, driven by concerns over US President Donald Trump’s aggressive tariff stance.
Last week, the United States significantly raised tariffs on Pakistani exports, increasing rates from 4-5 per cent to 29 per cent under its reciprocal trade policy.
Under the new policy, Pakistan will now face a 29 per cent tariff, mirroring its 58 per cent tariff on US goods, as cited by the administration.
European stocks sink
European stock markets also plummeted in early trading Monday, with Frankfurt slumping as much as 10 per cent as an international sell-off intensified on Trump’s tariffs.
AFP reported that indices were in freefall as the European Union faces 20 percent tariffs due to take effect on Wednesday, after Britain and other countries were hit with 10 per cent duties on Saturday.
Frankfurt claw back some of its early losses to trade down around seven percent some 40 minutes into the trading day.
Milan dived 7.5 per cent as Paris, Madrid, and Amsterdam retreated more than six per cent.
London and Oslo lost over five per cent in early deals.
