Asian stock markets are taking a serious hit following the recent tariffs imposed by former US President Donald Trump. As markets opened on Monday, major indexes in cities like Shanghai, Tokyo, Sydney, and Hong Kong saw dramatic drops. Analysts did not hold back in their assessments, calling the situation a "bloodbath."
With many Asian countries being major manufacturers, they are feeling the direct effects of these tariffs. Concerns are growing that this trade conflict could lead to a global economic slowdown or even a recession in the US, the world’s largest economy.
By midday, Japan’s Nikkei 225 was down by 6%. Australia’s ASX 200 lost around 4%, and South Korea’s Kospi fell 4.7%. Markets in mainland China, Hong Kong, and Taiwan faced even sharper declines as investors reacted to Friday’s drops when they were closed for holidays. The Shanghai Composite plunged over 6%, while the Hang Seng and Taiwan Weighted Index dropped about 10%.
Julia Lee, a Head of Investment from FTSE Russell, pointed out that these tariffs are increasing fears of inflation and recession. Recent speculation from Goldman Sachs suggests a 45% chance of a US recession in the next year, a rise from 35%. Meanwhile, JPMorgan forecasts a staggering 60% chance of both a US and global recession.
The repercussions of a US economic slowdown are significant for Asia, which heavily relies on American markets for exports. Qian Wang, an economist at Vanguard, emphasized that Asia is bearing the brunt of the tariff hikes. He noted that while there may be chances for negotiation, higher tariffs are likely here to stay, which could hurt both the global economy and smaller Asian economies in both the short and long term.
In a ripple effect from these tariffs, the global stock market saw substantial losses. The previous Friday, all three major US stock indexes dropped over 5%, with the S&P 500 facing its worst week since 2020. The UK’s FTSE 100 suffered a nearly 5% decline—its steepest fall in five years—while German and French markets faced similar downturns.
Global stock markets have lost trillions of dollars in value since Trump’s 10% import taxes were announced on goods from various countries, including key partners like China and the European Union.
As the landscape continues to evolve, analysts remain cautious about market recovery, suggesting that investors should brace for further turbulence. Keeping an eye on tariffs and trade relations will be crucial for understanding the future of global markets. For more information, you can read about the impact of trade policies from the BBC.
Check out this related article: China Positions Strategic Resources for Upcoming Trade Showdown with Trump
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