In today’s Asian market, equities opened on a downturn following a steep decline in U.S. stocks. This downturn comes in anticipation of elevated tariffs being introduced by the U.S. as directed by President Donald Trump. As the new tariffs took effect, imposing a 25% duty on imports from Canada and Mexico, an additional 10% tariff on China was also instigated. In response, China has signaled potential countermeasures targeting American agricultural exports, which include significant imports like soybeans.
Asian markets reflected this gloomy sentiment. Tokyo’s Nikkei 225 experienced a 1.9% drop down to 37,084.83, and Hong Kong’s Hang Seng tumbled by 1.6%, closing at 22,666.68. Conversely, the Shanghai Composite slightly dipped by 0.2% to settle at 3,310.35. South Korea saw a minor positive uptick with the Kospi rising just under 0.1% to 2,533.77, while Taiwan’s Taiex decreased by 0.9%. The general trend across Southeast Asian markets was largely bearish.
The ripple effects from the U.S. were significant: the S&P 500 suffered a 1.8% drop to hit 5,849.72. This came after Trump’s declaration of no further negotiations aimed at reducing tariffs slated for Canadian and Mexican goods. Initially postponed to allow diplomatic discussions, these tariffs have now come into effect. The Dow Jones Industrial Average also fell by 1.5% to reach 43,191.24, while the Nasdaq faced a sharp decline of 2.6%, landing at 18,350.19.
On Wall Street, Trump’s tariff announcement diminished hopes of a milder approach to global trade disputes amid signs of waning strength in the U.S. economy. Notably, the S&P 500’s gains since the previous election day dwindled to just over 1%, down from a high of more than 6%. Markets had previously rallied on expectations of economically strengthening policies from Trump’s administration.
The S&P 500’s earlier gains were supported by strong corporate profit reports. However, concerns regarding the U.S. economy, particularly consumer apprehensions about inflation driven by tariffs, have sobered market sentiment. Recent data also indicated a sluggish growth in U.S. manufacturing, with decreased new order to manufacturers, despite prices edging higher amid tariff-related cost considerations.
In response to new economic data, bond yields reacted, with the 10-year Treasury yield dipping to 4.16% from a prior 4.24%, signaling heightened concerns over a slowing U.S. economy. Since the start of the year, the yield has seen a notable decrease.
Technology stocks bore the brunt of market stress, notably Nvidia plunged by 8.8%, with Tesla declining by 2.8%. On another front, Kroger’s stock fell by 3% following the resignation of its CEO Rodney McMullen amid a personal conduct investigation.
Expectations of the European Central Bank’s upcoming interest rate decision buoyed European markets, yielding a favorable response to recent inflation data which suggests easing—Germany’s DAX saw a notable 2.6% rise and France’s CAC 40 rose by 1.1%. Interestingly, international stocks have shown more resilience than the U.S. counterparts despite ongoing “America First” trade policies.
Commodities such as U.S. benchmark crude oil dipped by 30 cents to $68.07 per barrel, and Brent crude fell by 51 cents to $71.11 per barrel in early Tuesday trading. In the currency market, the U.S. dollar saw a slight drop to 149.29 yen, while the euro decreased marginally to $1.0484.
Cryptocurrency also faced headwinds, with Bitcoin falling by 10.3% to reach $83,750, according to CoinDesk.
