Global stock markets experienced a downturn on Monday as concerns mounted regarding the potential implementation of tariffs by President Donald Trump on major U.S. trading partners.
In early trading, France’s CAC 40 fell by 1.6% to 7,826.14, while Germany’s DAX saw a decrease of 1.5%, reaching 21,395.31. The UK’s FTSE 100 dropped 1.3% to settle at 8,565.00. Meanwhile, U.S. stocks were predicted to decline as Dow futures decreased by 1.2% to 44,152.00, and S&P 500 futures fell 1.5% to 5,977.25.
Japan’s Nikkei 225 index faced a significant decline of 2.7%, closing at 38,520.09. Australia’s S&P/ASX 200 also reported a loss of 1.8%, finishing at 8,379.40. South Korea’s Kospi index witnessed a 2.5% drop, landing at 2,453.95. In Hong Kong, the Hang Seng index dipped slightly by less than 0.1% to 20,217.26, while Shanghai’s market remained closed due to a holiday.
Market analysts suggested that Asian markets are preparing for heightened volatility due to the escalating trade war fears. Yeap Jun Rong, a market strategist at IG, noted that trade restrictions could adversely affect global trade flows, trigger shifts in supply chains potentially leading to increased operational costs, and contribute to rising inflation.
Notably, SoftBank Group Corp. saw its shares climb by 0.5% following an announcement of a joint initiative with OpenAI in Japan to establish SB OpenAI Japan. Both companies will share ownership equally in this venture aimed at providing AI services.
The investment community reacted to news from a Chinese startup, DeepSeek, which is reportedly working on a more affordable large language model capable of competing globally. This disruption has raised questions about the necessity of investments in AI chips, causing a notable decline in some technology stocks.
Despite the looming tariff threats, technology shares in Hong Kong seemed resilient, which emphasized the strength of China’s technology sector.
Trump’s administration is set to impose a 25% tariff on most imports from Mexico and Canada, alongside a 10% tariff on products from China, effective Tuesday. However, the administration has yet to specify what conditions would lead to the potential removal of these tariffs concerning illegal immigration and fentanyl smuggling.
In retaliation, Canada and Mexico announced their own tariffs on American goods, with Canada implementing its measures on a variety of products starting Tuesday, though detailed specifics were not immediately released.
In recent developments, the U.S. Federal Reserve decided to maintain its benchmark interest rate, adopting a more cautious stance on the impact of Trump’s policies on inflation and the economy as a whole.
In the energy markets, U.S. crude oil prices surged by $1.76, reaching $74.29 per barrel, while Brent crude, the international benchmark, increased by $1.04 to $76.71 per barrel.
On the currency front, the U.S. dollar slightly appreciated against the Japanese yen, rising to 155.41 from 155.18 yen. The euro was valued at $1.0250, down from $1.0363.
