Asian markets faced a severe downturn on April 7, 2025, as China retaliated against the US with significant tariffs, intensifying a trade conflict that many fear could trigger a global recession. Investors scrambled to sell off assets, leading to the worst market performance since the pandemic.
Hong Kong stocks plunged by 10%, Tokyo saw an 8% drop, and Taipei lost over 9%. Futures for US markets also pointed to further losses. Commodities took a hit as concerns over demand drove prices down. The latest escalation came after China announced plans to impose a 34% tariff on all US goods starting April 10 and imposed export restrictions on critical rare earth elements.
Despite hopes that President Trump would reconsider his tariffs amid the market chaos, he remained firm, stating that he would not negotiate unless trade deficits were addressed. His stance led to a sharp market decline, with trillions of dollars wiped off corporate valuations.
The market losses affected nearly every sector. Major companies like Alibaba and JD.com saw their stocks drop by over 13%, while SoftBank and Sony also faced significant declines. Cities across Asia, including Shanghai, Singapore, and Seoul, experienced steep losses, triggering market halts in some areas.
Steve Cochrane, chief economist at Moody’s Analytics, warned that the US could be heading into a lengthy recession, which would further harm China’s economy due to reduced demand for its exports.
Oil prices slumped over 3%, reaching their lowest levels since 2021. Copper, essential for green energy technologies, also saw continued losses. As Stephen Innes from SPI Asset Management noted, the market is in “free-fall mode” as President Trump’s tariffs are viewed more as a victory than a negotiating tool.
The financial turmoil followed a similarly catastrophic day on Wall Street, where all three major indices dropped nearly 6%. Federal Reserve Chairman Jerome Powell also warned that the tariffs could stoke inflation and slow economic growth, adding to the central bank’s dilemma in managing interest rates.
Economists, like Tim Waterer from KCM Trade, are concerned that the ongoing tariff war could lead to significant economic damage for both the US and China, with traders increasingly avoiding riskier assets.
Market Recap (0400 GMT):
– Tokyo – Nikkei 225: DOWN 6.2% at 31,699.95
– Hong Kong – Hang Seng Index: DOWN 10.7% at 20,405.96
– Shanghai – Composite: DOWN 6.3% at 3,130.17
– West Texas Intermediate Oil: DOWN 2.7% at $60.31 per barrel
– Brent North Sea Crude: DOWN 2.7% at $63.84 per barrel
– US Dollar/Yen: DOWN at 146.33 yen (from 146.98)
– Euro/Dollar: DOWN at $1.0950 (from $1.0962)
– Pound/Dollar: DOWN at $1.2889 (from $1.2893)
– New York – Dow Jones: DOWN 5.5% at 38,314.86
– London – FTSE 100: DOWN 5.0% at 8,054.98
