Financial markets around the world were slammed on Monday, as investors recoiled from the prospects for a severe economic downturn sparked by an escalating trade war.
In Asia, trading was extremely volatile throughout the day. Among the markets hardest hit were Hong Kong, where stocks plunged more than 12 percent, and Taiwan, which tumbled 10 percent. Stocks in mainland China were down about 8 percent.
Benchmark indexes in South Korea tumbled about 5 percent, while Australia fell more than 4 percent. In Japan, declines were so sharp that the country’s exchange operator briefly halted trading in Japanese stock futures on Monday morning. The country’s Nikkei 225 index finished down more than 7 percent.
Stocks in Europe were down across the board in early trading. One sector hit particularly hard are bank stocks over fears of a general economic slowdown and freeze up in deal making take hold.
Over the weekend, analysts had circulated notes warning that Asia could be particularly vulnerable to a tit-for-tat exchange of retaliatory tariffs between China and the United States. Many countries in the region, including Japan and South Korea, count both nations as their top trading partners.
On Friday, China struck back at the United States with a 34 percent tariff on a number of American exports, matching a 34 percent tariff that Mr. Trump imposed on China last week. President Trump doubled down on Sunday evening, saying that he would not ease his tariffs on other countries “unless they pay us a lot of money.”
With hopes fading that the Trump administration will be willing to soften blanket tariffs imposed on all of the United States’ trade partners, analysts and investors in Asia said they were unable to discern a bottom to the market slides.
Technology stocks across Asia were clobbered. Taiwan Semiconductor Manufacturing Company, the world’s largest chip manufacturer, was down nearly 10 percent, while Apple’s main contract manufacturer, Foxconn, also plunged 10 percent. In Hong Kong, the Chinese technology giants Alibaba, Tencent and Xiaomi all tumbled.
In Japan, the electronics and semiconductor company Tokyo Electron at one point dropped 13 percent before paring some of those losses. Yaskawa Electric, a Japanese maker of industrial machinery and robots, plummeted more than 19 percent. Nintendo, which delayed pre-orders for the sequel to its best-selling Switch hand-held video game device, declined more than 7 percent.
Futures on the S&P 500, which allow investors to bet on the index before the official start of trading in New York on Monday, dropped roughly 4 percent on Sunday evening. In oil markets, prices fell more than 3 percent — adding to steep losses last week. And the price of copper, considered a broad economic indicator, slid more than 5 percent.
The 10.5 percent drop in the S&P 500 on Thursday and Friday was the worst two-day decline for the index since the onset of the coronavirus pandemic in 2020.
The only other instances of a worse two-day drop came during the 2008 financial crisis and the 1987 stock market crash, according Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. In dollar terms, the more than $5 trillion that was wiped out in the S&P’s value in the two days last week stands unmatched.
Even more unusual is that last week’s sell-off stemmed directly from presidential policy. Mr. Trump has so far brushed off concerns about the market reaction and potential economic consequences, showing little intention of backing down.
“If they’re maintained, the tariff hikes announced April 2 represent a self-inflicted economic catastrophe for the United States,” Preston Caldwell, senior US economist for Morningstar Research Services, said in a blog post on Friday.
The historically high tariffs that Mr. Trump announced on Wednesday caught investors, economists and businesspeople off guard, upending global economic forecasts.
Chief executives have begun warning consumers that they should expect prices to increase on some groceries, clothes and other products. Consumers have said they intend to rein in spending on big-ticket items. Some auto companies have already announced production pauses overseas, as well as job losses domestically. Bank economists have raised the odds that a recession will hit the United States over the next 12 months. As countries responded last week with tariffs of their own, the sell-off in financial markets accelerated.
The hedge fund manager Bill Ackman said on the social media platform X on Sunday that he supported Mr. Trump’s attempt to fix global tariffs, but implored the president to call a “90-day time out” on Monday.
Otherwise, “we are heading for a self-induced, economic nuclear winter, and we should start hunkering down,” he said. “May cooler heads prevail.”
Keir Starmer, the British prime minister, warned on Saturday that “the world as we knew it has gone” and urged countries not to retaliate against the United States and enter a full-blown trade war.
The S&P 500 is now 17.4 percent below its peak reached in February, on course to enter a bear market, defined as a drop of 20 percent or more from a recent peak.
The Nasdaq Composite index, which is chock-full of tech stocks that came under pressure as the sell-off accelerated last week, is already in a bear market, down almost 23 percent from its December peak. The Russell 2000 index of smaller companies that are more sensitive to the outlook for the economy has fallen over 25 percent from its November peak.
Still, some investors remain cautiously optimistic that the solid economy from the start of this year will withstand the onslaught of high tariffs, before the president turns to tax cuts and deregulation to stimulate the economy and avoid a recession.
Scott Bessent, the Treasury secretary, said on Sunday on the NBC program “Meet The Press” that he saw “no reason” to expect a recession.
Other analysts cautioned that the damage to the economy will depend on how long tariffs remain at elevated levels.
“We remain very cautious,” said Stuart Kaiser, an equity analyst at Citi. Even with last week’s drop, he said, markets may have further to fall because earnings and economic growth expectations remain “well above levels consistent with announced tariff levels.”
Tony Romm contributed reporting.
River Akira Davis covers Japan, including its economy and businesses, and is based in Tokyo. More about River Akira Davis
Joe Rennison writes about financial markets, a beat that ranges from chronicling the vagaries of the stock market to explaining the often-inscrutable trading decisions of Wall Street insiders. More about Joe Rennison
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