Asia-Pacific Markets Plunge as Trade War Fears Trigger Historic Sell-Off
HONG KONG/SINGAPORE – Asia-Pacific markets cratered on Monday, with Hong Kong’s Hang Seng Index collapsing over 10% in its worst single-day drop since the 2008 financial crisis, as escalating US-China trade tensions sparked a panicked flight from risk assets.
Key Market Moves:
- Hong Kong & China:
- Hang Seng Index plunged 10.37%, while the Hang Seng Tech Index crashed 12.11% (Sunny Optical, BYD Electronic, Lenovo down sharply).
- CSI 300 (China) sank 6.31% after Beijing retaliated with tariffs on US goods. People’s Daily warned of “prolonged pressure” and “plenty of countermeasures.”
- Japan & Taiwan:
- Nikkei 225 slumped 6.2% to an 18-month low; Topix fell 6.5%, triggering trading halts.
- Taiwan’s Taiex nosedived 9.62%, with TSMC and Foxconn halted after circuit breakers.
- South Korea, Australia, India:
- Kospi (Korea) dropped 4.74%; ASX 200 (Australia) entered correction territory, down 3.87% (mining stocks hit hard).
- India’s Sensex and Nifty 50 fell 3.24% and 4.01%, respectively (Tata Motors, Reliance, Adani stocks battered).
- Southeast Asia:
- Singapore’s Straits Times Index sank 6.26% (Seatrium, Venture Corp worst hit).
- Malaysia (KLCI -5.29%), Thailand (SETI -3.15%), Philippines (PSI -3.14%) also tumbled.
Safe-Haven Shifts & Commodities:
- Yen Strengthens: USD/JPY fell to 146.32 as investors fled to safety.
- Gold Crashes: Spot gold dropped below $3,000/oz after last week’s rally, as traders liquidated holdings to cover equity losses.
- Oil Slump: WTI crude fell below $60/barrel for the first time since April 2021.
US & Global Repercussions:
- Wall Street Futures pointed to further losses after Friday’s rout (Dow -5.5%, S&P 500 -6%, Nasdaq -5.8%).
- Trump’s Stance: The US president signaled openness to talks but insisted on resolving trade imbalances first. His advisers dismissed recession fears, vowing tariffs would stay.
Why It Matters:
- Contagion Risk: The sell-off reflects deepening panic over a protracted US-China trade war, with no quick resolution in sight.
- Policy Dilemma: Central banks face pressure to intervene, but tariff-driven inflation complicates rate-cut plans.
- Investor Sentiment: The meltdown erases $2 trillion+ in regional market cap, threatening pension funds and retail portfolios.
What’s Next:
- Focus shifts to China’s policy response and potential emergency G7/IMF coordination.
- Corporate earnings warnings likely as export-heavy sectors (tech, autos, commodities) brace for profit shocks.
Context:
- The US hiked tariffs last week on $300B+ of Chinese imports, including EVs, chips, and steel.
- China’s retaliation targets US agriculture, aerospace, and energy exports.
- Global growth forecasts are being revised downward, with Morgan Stanley warning of a “trade-driven recession.”
