Asian Markets Tumble on Trade War Fears
Asian markets plunged on Monday as investors grappled with the looming threat of a trade war sparked by President Trump's proposed tariffs. Japan's Nikkei 225 led the decline, plummeting 2.7%, followed by Australia's S&P/ASX 200 and South Korea's Kospi, which both fell over 2%. Hong Kong's Hang Seng also dipped, while Shanghai remained closed for a holiday.
Analysts attributed the market turmoil to the anticipation of volatility triggered by a potential trade war. Yeap Jun Rong, market strategist at IG, warned of the potential consequences, including reduced trade flows, supply chain disruptions, and higher inflation.
Wall Street also ended the previous week lower, with major indexes posting their first weekly loss in three weeks. The selling pressure was broad-based, with technology and energy companies taking a significant hit. Investors were particularly spooked by a report from Chinese startup DeepSeek about developing a cheaper large language model, raising concerns about the necessity of large investments in AI chips.
Adding to the uncertainty, President Trump's tariffs on imports from Canada, Mexico, and China were set to take effect on Tuesday. Canada and Mexico retaliated with tariffs of their own, further escalating tensions.
In energy trading, benchmark U.S. crude oil jumped, while Brent crude gained ground. The U.S. dollar edged up against the Japanese yen, while the euro fell.