Markets across Asia experienced a downturn on Tuesday, with investor sentiment impacted by ongoing trade tensions between the United States and China.
The Nikkei 225 in Tokyo fell by 1.1% to reach 38,336.73 following the reopening of Japanese markets after a holiday. Hong Kong’s Hang Seng Index decreased by 0.6% to 23,196.33, whereas the Shanghai Composite Index dipped slightly, shedding 0.1% to close at 3,368.24. The Australian S&P/ASX 200 also saw a drop, falling by 0.7% to 8,252.50. South Korea’s Kospi registered a 0.3% decline, resting at 2,637.45 after the Bank of Korea’s decision to reduce its interest rate from 3% to 2.75%, marking its third such move in four meetings as part of efforts to bolster the slowing economy.
Taiwan’s Taiex experienced a 1% decrease, while India’s Sensex diverged from the trend with a 0.4% increase.
In the United States, President Trump announced on Monday that upcoming tariff increases on Canadian and Mexican imports would proceed after a month-long delay. The president has recently heightened tensions with several U.S. trading partners by threatening tariff hikes, spurring concerns about potential retaliatory trade measures that could incite a full-blown trade war. This follows Trump’s move to impose an additional 10% tariff on Chinese goods in response to China’s alleged involvement in the production of the opioid fentanyl.
The uncertainty surrounding U.S. trade policies has prompted warnings from major corporations, and the University of Michigan’s consumer sentiment index dropped by about 10% over the previous month due to concerns over tariffs and worsening inflation.
U.S. stocks extended their losses on Monday, with mixed performances in various markets. German stocks recorded gains, with the DAX increasing by 0.6% following a conservative political victory centered on economic concerns.
The S&P 500 edged down by 0.5% to 5,983.25 on Monday, oscillating between small gains and losses throughout the day. The Dow Jones Industrial Average slightly rose by 0.1% to 43,461.21, while the Nasdaq Composite fell by 1.2% to 19,286.92.
Berkshire Hathaway’s shares rose by 4.1%, marking one of the stronger performances in the market, after announcing increased operating profits for the latest quarter. Despite the positive news, the company also revealed it holds $334.2 billion in reserves, suggesting Warren Buffett may view the current market as overvalued.
Starbucks saw a 1.3% increase after announcing plans to streamline operations under new CEO Brian Niccol by cutting 1,100 corporate jobs and leaving numerous positions unfilled.
Major U.S. corporations have generally reported stronger-than-expected profits for the final quarter of 2024, a key factor in the S&P 500’s recent record highs before last week’s downturn. On Wednesday, Nvidia will release its first profit report following a notable development in the AI sector by China’s DeepSeek, which claimed advancement without relying on top-tier, costly chips. Nvidia shares fell 3.1%, weighing heavily on the S&P 500.
Additional economic updates on consumer confidence and inflation are expected this week, driving Wall Street’s focus after recent slumps.
In early Tuesday trading, U.S. benchmark crude oil rose by 52 cents to $71.22 per barrel on the New York Mercantile Exchange. Brent crude, the global standard, climbed by 0.7% to $74.75 per barrel. The dollar weakened to 149.50 Japanese yen from 149.71 yen, while the euro increased to $1.0473 from $1.0468.
