Asian markets saw declines on Tuesday following a sharp sell-off on Wall Street, driven by concerns over the US economy. President Donald Trump’s ongoing trade war and proposed federal job cuts have fueled market unease.
Initially, Trump’s election raised hopes that his tax cuts and deregulation policies would stimulate economic growth, pushing equities to new heights. However, increasing concerns of a potential recession are now taking center stage, as tariffs imposed on key trading partners threaten to ignite inflation and force the Federal Reserve to raise interest rates again.
Trump’s comments over the weekend, stating that the economy was in a “period of transition” and his refusal to rule out a recession, failed to reassure investors.
A new round of tariffs set to take effect this week will impose 25% levies on steel and aluminum imports. The uncertainty surrounding these tariffs and threats of further measures have unsettled US financial markets, leaving consumers uncertain about what lies ahead.
Wall Street saw a major decline, with the Nasdaq plunging by 4% as tech giants like Apple, Amazon, and Tesla took a hit. Asian markets mirrored the downward trend, though some losses were pared later in the day. Tokyo dropped sharply after Japan’s Trade Minister, Yoji Muto, failed to secure an exemption from US tariffs.
Hong Kong extended its Monday sell-off, exacerbated by disappointing Chinese consumer price data, which deepened fears regarding the Chinese economy. However, Shanghai managed to recover slightly by the close. Other markets like Sydney, Singapore, Seoul, Taipei, Wellington, Mumbai, Bangkok, and Manila also experienced significant losses.
US futures were slightly higher, following Monday’s losses.
Shaun Murison, a senior market analyst at IG online trading platform, stated, “Economic uncertainty and recession fears have intensified, partly driven by President Trump’s weekend comments about the economy being in ‘a period of transition’ and his reluctance to rule out a recession. This uncertainty has heightened investor anxiety. Trump’s trade policies, including ongoing tariff discussions, are creating fear of an economic slowdown, which could elevate prices and complicate efforts to reduce interest rates.”
The market pessimism of recent weeks has spread to other risk assets, with Bitcoin dipping below $80,000 on Monday—its lowest point since November, after peaking at nearly $110,000 in January. Additionally, oil prices edged up after a more than 1% drop on Monday, amid growing concerns over demand as recession fears loom.
Key Market Figures at 0700 GMT:
- Tokyo – Nikkei 225: DOWN 0.6% at 36,793.11
- Hong Kong – Hang Seng Index: DOWN 0.6% at 23,643.37
- Shanghai – Composite: UP 0.4% at 3,379.83
- Euro/dollar: UP at $1.0858 from $1.0836
- Pound/dollar: UP at $1.2894 from $1.2878
- Dollar/yen: DOWN at 147.24 yen from 147.26 yen
- Euro/pound: UP at 84.21 pence from 84.13 pence
- West Texas Intermediate: UP 0.1% at $66.09 per barrel
- Brent North Sea Crude: UP 0.2% at $69.44 per barrel
- New York – Dow: DOWN 2.1% at 41,911.71 points
- London – FTSE 100: DOWN 0.9% at 8,600.22
AFP
