Hong Kong
CNN
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Stocks markets across Asia sank on Tuesday following mounting fears of a serious economic downturn in the world’s largest economy, as US President Donald Trump ramped up a tariff war against its biggest trade partners.
Trump’s refusal to rule out the possibility of a US recession on Sunday has rattled Wall Street investors. Now, those fears have extended to the Asia-Pacific region, with the MSCI’s broadest index of Asia-Pacific shares outside Japan down more than 1%.
Japan’s benchmark Nikkei 225 plunged nearly 3% in the morning session but had recovered some of those losses by the lunchtime break. South Korea’s KOSPI slid as much as 2.5%. Taiwan’s TAIEX was at one point almost 3% down. Australia’s S&P/ASX 200 dropped as much as 1.7%, while Hong Kong’s Hang Seng Index was down less than 1%.
Regional technology shares were among the losers. Japanese tech giants, including Sony and Hitachi, plummeted more than 4.5% in the morning. Softbank slumped as much as 4.4%.
Meanwhile, both Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, and Apple supplier Foxconn slid over 3%. Korea’s tech heavyweight Samsung fell over 2%.
Initially welcomed by Wall Street, Trump’s second presidency has led to weeks of market turmoil since his inauguration. Anxiety has built up over a potentially worsening economic outlook as Trump upends trade relations by piling tariffs on Canada, Mexico and China, while slashing government spending.
In early February, he threatened to impose a 25% duty on all imports from Mexico and most goods from Canada, but he has delayed its implementation until early next month.
Last week, Trump doubled tariffs on all Chinese imports to 20%. China has responded with a fresh round of retaliatory tariffs, covering US agriculture imports, which took effect on Monday.
The latest market rout came after Trump declined to comment on whether the US could face a recession. When asked on “Sunday Morning Futures With Maria Bartiromo” on Fox News if he was expecting a recession this year, Trump said, “I hate to predict things like that.” But he said a “period of transition” is expected.
Nigel Green, founder and chief executive of financial consultancy deVere Group, said in a Monday note to clients that US markets were heading toward a potential correction, typically a 10% drop from recent highs, after outpacing the rest of the world for the past year.
“The warning signs are stacking up. Consumer sentiment is slipping, inflation remains persistent, and initial jobless claims are climbing,” he said.
On Monday, the Nasdaq suffered the sharpest single-day decline since September 2022, while the Dow and S&P 500 each posted their worst day of the year. The Dow closed lower by 890 points, down 2.08%. The S&P 500 plunged 2.7%. The tech-heavy Nasdaq Composite plummeted 4%, dragged down by Tesla shares.
All the gains recorded by the major three US indexes since Trump won the election last year have been wiped out.
On Monday, Delta Air Lines slashed its earnings forecast, casting further uncertainty on the economic outlook. It said in a filing that the increasing economic worries have brought down consumer and corporate confidence, driving softer demand.
Europe’s benchmark Stoxx Europe 600 index closed 1.3% lower on Monday.
