Asia-Pacific markets fell sharply on Monday, largely weighed down by the growing U.S.-China trade war. Just like all other regions, the region had to grapple with extreme fears of an impending global recession. In reaction, investors panicked, catalyzing deep sell-offs in almost every major index and sector.
In the resulting fallout, Amala Balakrishner reported on U.S. reactions to China’s most recent retort to the several increases in tariffs that we imposed. The period of upheaval in the U.S. was dramatic. The Dow Jones Industrial Average nosedived 2,231.07 points—or 5.5%—and ended at 38,314.86 on Friday. As a result, the S&P 500 shocked the markets by dropping a massive 5.97% to 5,074.08. This decrease is its biggest drop since March 2020.
The ripple effects of many of these developments were felt across the Asia-Pacific region. Japan’s yen was the biggest mover, though, rising 0.86% against the dollar to 145.63 as of Monday morning. This increase came despite widespread concern that the US-China trade war would threaten to weigh on the Japanese economy.
In Singapore, the 30-stock Straits Times Index tanked 6.26%, to 3,585.93 as of mid-morning. The market upheaval hit all sectors, but particularly took a toll on technology stocks, which were seen as extremely overvalued and in bubble territory. Renesas Electronics saw a staggering drop of 14.10% by 12:50 p.m. Singapore time, reflecting broader fears about the tech industry’s vulnerability in a shaky economic environment.
India’s benchmark indexes opened down about 500 points on Monday. They were soon caught up in the tide of popular losses rolling across all Asia-Pacific markets. Hong Kong’s Hang Seng Index notably dropped 10.21% as of 9:52 a.m. local time, underscoring the extent of the sell-off in the region.
Qi Wang, the former Chief Investment Officer at a major brokerage house, recently wrote to us that the current market landscape. He said all this in an appearance before CNBC’s “The China Connection.” He did imply that investors are coming to terms with the new normal of trade relations.
“My suspicion is that their thinking is it’s not a sustainable tool to use, and they wanted to decouple from the U.S. to a certain extent,” – Qi Wang
Economists at Nomura commented on the likely long-term effects of the newest tariff increases. They increased their estimates for Japan’s fiscal year 2025 growth to 0.6% (from a prior forecast of 0.9%).
“We think that the impact of these tariff hikes will gradually emerge from Apr–Jun 2025,” – Nomura analysts
Further analysis conducted by Nomura analysts indicated that these tariff increases would lead to multi-billion dollar declines in Japan’s economic performance.
“We estimate a 1.0ppt dent to growth in Japanese real exports (goods and services) and a 0.3ppt dent to real GDP growth compared to when there were no tariff hikes,” – Nomura analysts
This recent sell-off was not just a rotation within individual stocks and sectors, nor limited to the US markets. In India, shares of Mukesh Ambani’s Reliance Industries dropped by 5.03%. At the same time, companies owned by Gautam Adani lost huge amounts of money in the chaotic market.
“There is still a great deal of uncertainty about these estimates,” – Nomura analysts
The sell-off was not limited to individual stocks or regions. In India, shares of Mukesh Ambani’s Reliance Industries declined by 5.03%, while companies owned by Gautam Adani also suffered losses amid the turbulent market conditions.
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