Asian stock markets tumble – with Hong Kong’s Hang Seng index suffering worst fall for 28 years

Asian inventory markets have fallen dramatically amid escalating fears of a world commerce warfare – as Donald Trump referred to as his tariffs “drugs” and confirmed no signal of backing down.

Hong Kong’s Grasp Seng index of shares closed down 13.2% – its greatest one-day drop since 1997, whereas the Shanghai composite index misplaced 7.3% – the worst fall there since 2020.

Elsewhere, Japan’s Nikkei 225 misplaced 7.8%, whereas London’s FTSE 100 was down 4.85% by 9am.

Tariffs latest – FTSE falls after Asian markets tumble

US inventory market futures signalled additional losses had been forward when buying and selling begins in America later.

At 4am EST, the S&P 500 futures was down 4.93%, the Dow Jones 4.32% and the Nasdaq 5.33%.

Markets are reacting to ongoing uncertainty over the impression of President Trump’s tariffs on items imported to the US, which he announced last week.

Talking on Air Pressure One on Sunday, Mr Trump mentioned overseas governments must pay “some huge cash” to elevate his tariffs.

“I do not need something to go down. However typically it’s a must to take drugs to repair one thing,” he mentioned.

The US president mentioned world leaders had been making an attempt to persuade him to decrease additional tariffs, that are because of take impact this week.

“I spoke to a whole lot of leaders, European, Asian, from everywhere in the world,” Mr Trump informed reporters.

“They’re dying to make a deal. And I mentioned, we’re not going to have deficits together with your nation.

“We’re not going to try this as a result of to me, a deficit is a loss. We will have surpluses or, at worst, going to be breaking even.”

Mr Trump, who spent a lot of the weekend enjoying golf in Florida, posted on his Fact Social platform: “WE WILL WIN. HANG TOUGH, it will not be simple.”

President Trump believes his coverage will make the US richer, forcing firms to relocate extra manufacturing to America and creating jobs.

Nevertheless, his announcement has shocked inventory markets, triggered retaliatory levies from China and sparked fears of a world commerce warfare.

Actuality hits that commerce warfare now not only a risk

China’s announcement of its tariff retaliation got here late afternoon on Friday native time.

Most Asian markets closed shortly after – and markets in China, Hong Kong and Taiwan had been closed for a public vacation – which means the dimensions of the hit didn’t play out till in the present day.

This morning we’re getting a way of the impression. Dramatic falls throughout all Asian markets clearly sign a realisation a world commerce warfare is now not only a risk, however a actuality right here to remain, and a world recession might but observe.

Up till Friday, China’s response to Donald Trump’s tariffs had been perceived as restrained and designed to keep away from escalation, the markets had reacted accordingly.

However that every one modified final week when Mr Trump’s new 34% levy on all Chinese language items was matched by China with an similar tax. Each sit on prime of earlier tariffs levied, which means many items now face charges in extra of fifty%.

These are numbers that make most commerce between the world’s two greatest economies virtually inconceivable and that may have a world impression.

China has clearly determined any forthcoming ache must be managed, and never being seen to be cowed and bullied by Mr Trump is being deemed extra essential.

However the scale of the retaliation could have additional spooked the markets because it makes the prospect of negotiation and retreat more and more unlikely.

Mr Trump added to the ambiance of intransigence when he informed the media on Sunday the commerce deficit with China would should be addressed earlier than any deal may very well be carried out. The whole lack of concern from the White Home over the weekend will even not have helped.

Whereas smaller economies like Japan, South Korea, Cambodia and Vietnam are all lining as much as try to barter, there are a whole lot of nations in that queue.

There’s a sense none of this can be simply rectified.

US customs brokers started accumulating Mr Trump’s baseline 10% tariff on Saturday.

Greater “reciprocal” tariffs of between 11% and 50% – relying on the nation – are because of kick in on Wednesday.

Traders and world leaders are not sure whether or not the US tariffs are right here to remain or a negotiating tactic to win concessions from different nations.

Richard Flax, chief funding officer at wealth supervisor Moneyfarm, mentioned: “I suppose there was some hope over the weekend that perhaps we might see this as a part of the beginning of a negotiation.

“However the messages that we have to date seen counsel that the President Trump is comfy with the market response and that he’ll proceed on this course.

Goldman Sachs has raised the percentages of a US recession to 45%, becoming a member of different funding banks which have additionally revised their forecasts.

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Within the UK, Sir Keir Starmer has promised “bold changes” and mentioned he would chill out guidelines round electrical autos as British carmakers take care of a brand new 25% US tariff on autos.

The prime minister mentioned “world commerce is being reworked” by President Trump’s actions.

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KPMG has warned tariffs on UK exports might see GDP progress fall to 0.8% in 2025 and 2026.

The accountancy agency mentioned larger tariffs on particular classes, corresponding to automobiles, aluminium and metal, would greater than offset the exemption on pharmaceutical exports, leaving the efficient tariff fee round 12%.

Yael Selfin, chief economist at KPMG UK, mentioned: “Given the financial impression that tariffs would trigger, there’s a robust incentive to hunt a negotiated settlement that diminishes the necessity for tariffs.

“The UK automotive manufacturing sector is especially uncovered given the complicated provide chains of some producers.”

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