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Global markets tumbled on Monday over fears of an escalating trade war ahead of Donald Trump’s expected unveiling of a swath of new tariffs this week.
Asian and European stocks fell sharply alongside US futures, accelerating a sell-off that began last week, after Trump said that the reciprocal US duties he is expected to announce on April 2 would apply globally.
“You’d start with all countries, so let’s see what happens,” Trump told reporters on Air Force One on Sunday. Last week he had hinted at concessions for some countries.
The US president singled out Asia for its trade practices. “Take a look at trade with Asia. I wouldn’t say anybody has treated us fairly,” he said.
The chaotic rollout of Trump’s aggressive trade agenda has roiled markets and alarmed the US’s trading partners, many of whom have threatened to retaliate.
The US president has said that on Wednesday, which he has dubbed “liberation day”, he will impose levies on any country the White House deems to have an unfair trading relationship with the US.
Japan’s benchmark Topix dropped 3.3 per cent and the exporter-oriented Nikkei 225 slid 3.9 per cent. In Taiwan, the Taiex shed 4.2 per cent, while South Korea’s Kospi fell 3 per cent. Hong Kong’s Hang Seng retreated 1.6 per cent.
Futures markets pointed to continued falls in the US, with contracts tracking the Nasdaq 100 down 1.3 per cent and the S&P 500 down 0.8 per cent.
Europe’s broad-based Stoxx 600 index dropped 0.8 per cent when the market opened and FTSE 100 lost 0.9 per cent.
Chipmakers from the region were among the biggest losers, with Taiwan Semiconductor Manufacturing Company and Samsung Electronics dropping 4.4 per cent and 3.5 per cent respectively. Japan’s Disco, a maker of tools for chip production, declined more than 8 per cent.
In Hong Kong, Tencent and Alibaba fell 1.5 per cent and 2 per cent respectively.
Gold surged to a record $3,128 a troy ounce, while US Treasury yields declined in a sign that investors were piling into safe assets. The 10-year US Treasury yield fell 0.06 percentage points to 4.2 per cent.
“Many investors are [waiting] for actual tariffs to be announced, unwinding their positions and realising gains,” said Wei Li, head of multi-asset investments for BNP Paribas in China. “This tariff announcement . . . has affected the whole market sentiment.”
In currency markets, the yen strengthened 0.6 per cent against the dollar to ¥148.9, while the offshore renminbi strengthened 0.2 per cent to 7.26 a dollar. The US dollar edged down 0.2 per cent against a basket of key trading partners’ currencies.
The movements in Asia came after falls on Friday in the US, where the S&P 500 dropped 2 per cent. The tech-focused Nasdaq Composite slid 2.7 per cent as gloomy data on the economy and consumer sentiment raised fears about stagflation.