BANGKOK — On Monday, Asian stock markets reflected a mixed landscape following a notable decline in U.S. stocks, triggered by concerns regarding the economic outlook as businesses and consumers react to President Donald Trump’s policies. Notably, Tokyo’s markets were closed due to a public holiday.
In Hong Kong, the Hang Seng index saw a decrease of 0.6%, settling at 23,348.82, while the Shanghai Composite index dipped 0.1% to 3,375.29. Conversely, the S&P/ASX 200 in Australia experienced a slight gain of less than 0.1%, reaching 8,300.80. South Korea’s Kospi index fell by 0.7% to 2,636.55, and Taiwan’s Taiex saw a drop of 0.6%. India’s Sensex faced a decline of 0.9%.
The previous Friday, the S&P 500 index suffered a significant setback of 1.7%, marking its most substantial drop in two months, and closed at 6,013.13 due to several disappointing economic reports from the U.S. The Dow Jones Industrial Average fell sharply by 748 points, equivalent to 1.7%, to close at 43,428.02, while the Nasdaq composite experienced a decline of 2.2%, finishing at 19,524.01.
According to a report from S&P Global, U.S. business activities are nearing a standstill, showing growth at a 17-month low, particularly due to a surprising contraction in the U.S. services sector. Many businesses expressed pessimism regarding future conditions. Chris Williamson, chief business economist at S&P Global Market Intelligence, remarked on the prevalent concern among companies regarding the impact of federal government policies, which includes spending cuts, tariffs, and geopolitical issues. He noted that uncertainty generated by the shifting political landscape is adversely affecting sales, with rising costs attributed to tariff-related price increases.
Ken Wattret, a global economist at S&P Global, mentioned that they have been adjusting their forecasts to account for increasing U.S. tariffs and related countermeasures since December 2024. He indicated that trade weaknesses primarily contribute to the projected slowdown in global GDP growth rates this year, highlighting that reduced investment represents a significant downside risk.
Additionally, a separate survey indicated that U.S. consumers are bracing themselves for escalating inflation, partly due to potential tariffs that may inflate prices for various imports. The survey from the University of Michigan revealed that consumers expect prices to rise by 4.3% over the next year, showing a sharp increase from the previous forecast of 3.3%. This aligns with preliminary data indicating similar trends earlier this month.
Another report revealed that sales of previously owned homes in the U.S. were weaker than anticipated, owing to high mortgage rates and steep home prices, which continue to limit market activity.
Stocks of smaller companies, which tend to be more directly affected by the U.S. economic environment compared to larger multinational firms, saw more considerable declines than the rest of the market. The Russell 2000 index of small stocks recorded a significant drop.
Akamai Technologies faced the largest decline within the S&P 500, plummeting by 21.7% despite posting better-than-expected profits for the last quarter. Investors, however, were more focused on the company’s disappointing revenue forecasts for the upcoming year.
Prior to Friday’s decline, the S&P 500 had been on a trajectory of minimal price movement, buoyed by a series of positive profit announcements that countered ongoing concerns about persistent inflation that could hinder the Federal Reserve’s ability to ease interest rates further.
The Federal Reserve has maintained interest rates after significantly reducing them towards the end of the previous year. During their last policy meeting in January, officials indicated that they might opt for a cautious approach with rates due to uncertainties around Trump’s proposed tariffs and migration measures, which could drive inflation higher.
While lower interest rates typically spur economic expansion, they can also lead to increased spending, which may contribute to inflationary pressures.
In early trading on Monday, U.S. benchmark crude oil saw a decrease of 21 cents, priced at $70.19 per barrel on the New York Mercantile Exchange, while Brent crude, the international benchmark, fell by 17 cents, settling at $73.88 per barrel.
In currency exchanges, the U.S. dollar rose to 149.28 Japanese yen from 149.24 yen, and the euro increased to $1.0512 from $1.0462.
