Asian stock markets faced a downturn on Monday amid rising concerns over potential tariffs imposed by President Donald Trump on major trading partners. The Nikkei 225 in Japan dropped by 2.4%, closing at 38,612.96. Australia’s S&P/ASX 200 fell by 1.8% to 8,376.30, while South Korea’s Kospi decreased by 2.9%, settling at 2,443.57. In Hong Kong, the Hang Seng index dipped 1.4% to 19,942.54, and the Shanghai Composite remained mostly unchanged at 3,250.60.
Market experts pointed out the growing anxiety surrounding the possibility of an escalating trade war affecting Asian markets. Yeap Jun Rong, a market strategist at IG, mentioned that trade restrictions could lead to fewer global trade flows, shifts in supply chains, increased business costs, and overall inflation.
Last week, Wall Street also saw declines, with the S&P 500 dropping 0.5% and the Nasdaq composite losing 0.3%. These losses marked the first week of declines in three weeks, with the Dow Jones Industrial Average falling by 0.8%. Roughly 75% of S&P 500 stocks ended the day lower, notably driven down by technology and energy sectors.
Investors were also unsettled by a report from a Chinese business about developing a more affordable large language model, raising doubts about the need for significant investments in AI chips. Consequently, shares in some tech companies experienced significant losses.
President Trump’s upcoming tariffs, which include a 25% fee on most imports from Canada and Mexico and a 10% tariff on goods from China, are set to take effect soon. However, the administration has not clarified the necessary criteria for lifting these tariffs, especially concerning illegal immigration and fentanyl smuggling.
In response, Canada and Mexico have announced retaliatory tariffs on U.S. products, with Canada’s measures starting Tuesday. The uncertainty surrounding these tariffs has contributed to an increase in long-term bond yields, including a rise in the 10-year Treasury yield to 4.54%.
Last week, the U.S. Federal Reserve opted to keep its benchmark interest rate unchanged, suggesting a cautious stance regarding the potential impacts of Trump’s policies on inflation and economic stability.
In energy markets, U.S. crude oil prices increased by $1.10 to $73.63 a barrel, while Brent crude rose by 40 cents to $76.07. The U.S. dollar also saw minor fluctuations, rising against the Japanese yen but declining slightly against the euro.
