Asia’s stock markets mirrored Wall Street’s plunge on Tuesday amid heightened concerns that an extensive trade war could stifle U.S. economic growth and potentially trigger a recession. Investors, seeking refuge, turned to the stable Japanese yen.
Investor anxiety intensified following President Donald Trump’s remarks in a Fox News interview where he referred to a “period of transition” but refrained from predicting whether his tariffs might lead the U.S. into a recession. These statements further dampened risk appetite, causing a downturn in stock prices and pressuring both the U.S. dollar and Treasury yields.
Across Asian markets, there was widespread selling as Japan’s Nikkei indices fell 2.34% to 36,161.70 points, reaching their lowest points since September last year.
Shanghai Composite dipped 0.34% to 3,354.60 points, while Hong Kong’s Hang Seng Index fell 1.25% to 23,486.90 points.
Additionally, Australia’s ASX200 dropped 1.30% and Korea’s Kospi fell 2.05%.
Over the night in Wall Street, the S&P 500 had a significant 2.7% drop on Monday, marking its steepest one-day decline this year, while the Nasdaq tumbled 4.0%, the largest single-day drop since September 2022. During Asian trading hours on Tuesday, both S&P and Nasdaq futures declined by 1%.
The S&P 500 is now down 8.7% from its record high on February 19, and the Nasdaq Composite is down nearly 14% from its recent peak, with a 10% drop typically signaling a market correction on Wall Street.
In the bond market, yields on U.S. benchmark 10-year Treasuries decreased by 5 basis points during Asian trading after a 10 basis point drop in the previous session—the most significant daily fall in nearly a month. The yield on the two-year note, which usually aligns with Federal Reserve interest rate expectations, also fell 5 basis points to reach a five-month low.
According to data from LSEG, traders are now anticipating 88 basis points of rate reductions from the Federal Reserve this year, up from 75 basis points projected on Monday.
