HONG KONG (AFP) – Asian markets fell yesterday following a sharp sell-off on Wall Street fuelled by fears about the United States (US) economy as US President Donald Trump presses ahead with his global trade war and federal jobs cuts.
Traders had initially welcomed his election on optimism that his promised tax cuts and deregulation would boost the world’s top economy and help equities push to more record highs.
But there is now a growing pessimism that a recession could be on the cards amid warnings that tariffs imposed on key trade partners will reignite inflation and force the Federal Reserve to hike interest rates again.
The president’s weekend comments that the economy was facing “a period of transition” and his refusal to rule out a downturn did little to soothe investor worries. A new wave of tariffs due this week will see steep levies of 25 per cent on steel and aluminium imports.
Uncertainty over Trump’s tariffs and threats have left US financial markets in turmoil and consumers unsure of what the year might bring. Fears about the future battered Wall Street, where the Nasdaq tanked four percent owing to another plunge in high-flying tech titans including Apple, Amazon and Tesla.
And Asia followed suit in the morning with big losses across the board, though traders pared the losses as the day wore on.
Tokyo was hit after Japanese Trade Minister Yoji Muto said he had failed to win an immediate exemption from US tariffs.
Hong Kong extended Monday’s selling that was stoked by a big miss on Chinese consumer prices that added to worries about the Chinese economy. But Shanghai reversed to end slightly higher. Sydney, Singapore, Seoul, Taipei, Wellington, Mumbai, Bangkok and Manila were also deep in negative territory. US futures also inched higher, having extended Monday’s losses in the morning.
“Economic uncertainty and recession fears have intensified, partly driven by President Trump’s weekend comments about the economy being in ‘a period of transition’ and his reluctance to rule out a recession,” said senior market analyst at IG online trading platform Shaun Murison.
“This uncertainty has heightened investor anxiety. Trump’s trade policies, including ongoing tariff discussions are creating uncertainty and fears of economic slowdown. The plunge in sentiment across markets in the past few weeks has filtered through to other risk markets, with bitcoin falling below USD80,000 on Monday to its lowest level since November – having hit a record close to USD110,000 in January.
at the KEB Hana Bank headquarters in Seoul, South Korea. PHOTO: AP
