TOKYO — Trading in Asia exhibited a downward trend on Monday, driven by increasing fears regarding President Donald Trump’s potential imposition of tariffs on significant U.S. trading partners.
Japan’s primary stock index, the Nikkei 225, fell by 2.7%, concluding the day at 38,520.09. In Australia, the S&P/ASX 200 recorded a 1.8% decline, settling at 8,379.40. South Korea’s Kospi index saw a drop of 2.5%, finishing at 2,453.95. Meanwhile, Hong Kong’s Hang Seng index experienced a slight decline of 0.3%, closing at 20,160.42. Trading activity in Shanghai was halted due to a holiday.
Market analysts believe that Asian financial markets are preparing for potential volatility linked to an escalating trade war. Yeap Jun Rong, a market strategist, noted that trade restrictions could adversely impact global trade flow and lead to adjustments in supply chains, leading to increased costs for businesses and a rise in inflation rates.
In the previous week, U.S. stock markets ended on a negative note, as the S&P 500 index dropped by 0.5%. The Nasdaq composite index also fell by 0.3%, marking the first weekly loss in three weeks. The Dow Jones Industrial Average decreased by 0.8%, with approximately 75% of the stocks listed on the S&P 500 closing lower. The technology and energy sectors were significantly affected by this downturn.
Investors reacted sharply to a report from a new Chinese company, DeepSeek, which is working on an affordable large language model with global capabilities. This announcement prompted discussions about the necessity of the expected investments in AI chips, resulting in a decline in several technology stock prices.
Effective Tuesday, Trump is set to impose 25% tariffs on many imports from Canada and Mexico, along with 10% tariffs on goods from China. The administration has yet to clarify what specific improvements would need to occur regarding illegal immigration and fentanyl smuggling in order to consider lifting these tariffs.
In response, Canada and Mexico have announced retaliatory tariffs on U.S. goods. Canada’s tariffs are scheduled to take effect on Tuesday, although specifics regarding the products affected have not been disclosed immediately.
Concerns over tariffs are contributing to a rise in long-term bond yields, including the 10-year Treasury yield, which increased to 4.54% on Friday from 4.52% the previous day. Yields have generally trended upward since September, as the U.S. economy has demonstrated more resilience than many economists anticipated.
Additionally, the U.S. Federal Reserve opted to maintain its benchmark interest rate last week, adopting a more cautious stance on how Trump’s policies might influence inflation and the overall economy.
In energy markets, benchmark U.S. crude oil prices surged by $1.37, reaching $73.90 per barrel. Similarly, Brent crude, the international price standard, rose by 72 cents to $76.39 per barrel.
In the currency market, the U.S. dollar saw a slight increase against the Japanese yen, rising to 155.52 yen from 155.18 yen. The euro was valued at $1.0243, a decrease from $1.0363.
This report has been updated to clarify that the Shanghai market was closed.
