Investors fear economic fallout could impact global growth, oil demand
Major stock indexes across Asia experienced significant declines on Monday, pressured by escalating trade tensions and the impact of U.S.tariffs on markets.
Oil prices also fell sharply, with Brent crude dropping by $1.35 to $64.23 per barrel and U.S.crude declining $1.395 to $60.60 per barrel.
These developments heightened investors’ concerns about a potential recession in the wake of mounting tariff woes.
Futures markets reacted swiftly, pricing in nearly five quarter-point cuts in U.S.rates for the year, which led to a sharp drop in Treasury yields and weakened the dollar.
A senior FX analyst at ITC Markets in Sydney, Sean Callow, remarked, “The only real circuit breaker is President Trump’s iPhone, and he is showing little sign that the market selloff is bothering him enough to reconsider a policy stance he has maintained for years.”
Wall Street’s substantial losses, amounting to trillions of dollars, had led investors to hope that Trump would reconsider his approach.
Bruce Kasman, head of economics at JPMorgan, highlighted the disruptive potential of U.S.trade policies, asserting that continued pressure could push both the U.S.and global economies into recession, assigning a 60% risk of such an outcome.
In volatile trading, S&P 500 futures fell by 3.1%, while Nasdaq futures plummeted 4.0%, compounding last week’s nearly $6 trillion market losses.
The negative sentiment also spread to European markets, with EUROSTOXX 50 futures dropping 3.0%, FTSE futures declining 2.7%, and DAX futures falling by 3.5%.
In Asia, Japan’s Nikkei index sank 6%, hitting lows not seen since late 2023, while South Korea’s market declined by 5%.
The MSCI index of Asia-Pacific shares outside Japan dropped 3.6%, and Chinese blue chips decreased by 4.4%, as investors anticipated a potential stimulus response from Beijing.
Taiwan’s main index saw a staggering fall of nearly 10% as it reopened after a closure on Thursday and Friday, prompting policymakers to act against short selling.
The gloomy outlook for global growth significantly pressured oil prices, which continued to decline following sharp losses last week.
The flight to safe havens resulted in a decrease in 10-year Treasury yields, down 8 basis points to 3.916%, while Fed fund futures indicated a likelihood of an additional quarter-point cut this year.
Market sentiment shifted to suggest a 56% chance of a Fed cut as soon as May, despite Fed Chair Jerome Powell indicating no urgency on rate adjustments.
The dollar dipped further by 0.4% against the safe-haven Japanese yen and 0.6% against the Swiss franc, while the trade-sensitive Australian dollar fell by 0.4%.—NNI
