Market Performance

On Monday, global stock markets faced significant declines driven by heightened anxieties over an impending trade war, as investors braced for announcements of new tariffs by U.S. President Donald Trump.

The sell-off, which accelerated following a week of declining sentiment, was evident in Asian and European stock indices, alongside bearish trends in U.S. futures.

Trump’s Tariff Plans

President Trump indicated that a comprehensive set of tariffs, expected to be revealed on “liberation day” Wednesday, would affect all nations involved in what he described as unfair trade practices. “You’d start with all countries, so let’s see what happens,” he stated while aboard Air Force One.

Last week, Trump had suggested that certain countries might receive exemptions, but he has since explicitly pointed to Asian nations, asserting, “I wouldn’t say anybody has treated us fairly.”

Impact on Global Markets

The repercussions in Asia were notable, with Japan’s Topix index dropping by 3.3% and the exporter-focused Nikkei 225 falling by 3.9%. Other significant declines included:

• Taiwan’s Taiex: -4.2%
• South Korea’s Kospi: -3%
• Hong Kong’s Hang Seng: -1.6%

Futures markets indicated further declines in the U.S., projecting the Nasdaq 100 to decrease by 1.3% and the S&P 500 by 0.8%.

The European markets were similarly affected, with the broad-based Stoxx 600 index down 0.8% and the FTSE 100 losing 0.9% upon opening.

Sectors Most Affected

Chip manufacturers were particularly hard hit. Notable declines included:

• Taiwan Semiconductor Manufacturing Company: -4.4%
• Samsung Electronics: -3.5%
• Disco, a Japanese toolmaker for chip production: over -8%

In Hong Kong, leading technology firms faced losses as well, with Tencent and Alibaba falling by 1.5% and 2%, respectively.

Safe Haven Assets and Currency Movements

As uncertainty loomed, investors flocked to safe-haven assets. Gold prices surged to a record high of $3,128 per troy ounce, while U.S. Treasury yields fell, indicating a shift towards conservative investments. The 10-year Treasury yield decreased by 0.06 percentage points, settling at 4.2%.

Currency markets also saw significant movements; the yen strengthened against the dollar by 0.6% to ¥148.9, whereas the offshore renminbi appreciated by 0.2% to 7.26 per dollar. The U.S. dollar experienced a minor decline of 0.2% against a basket of major currencies.

Conclusion

The turmoil in the stock markets reflects overarching concerns regarding the potential for escalating trade tensions. As Trump prepares to roll out these tariffs, market participants remain cautious, with many opting to adjust portfolios in anticipation of the changes to come. Investors are keenly waiting for the formal announcements that could define the trading landscape moving forward.