Major stock indexes plunged in Asia on Monday as U.S. President Donald Trump showed no sign of backing away from his sweeping tariff plans, and investors speculated that the increasing risk of recession could prompt the Federal Reserve to cut rates as early as May. Futures markets reacted quickly, pricing in nearly five quarter-point cuts in U.S. rates this year, which sharply pulled down Treasury yields and weakened the dollar in safe-haven assets.
Trump’s firm stance on tariffs
The carnage unfolded as Trump informed reporters that investors would need to “take their medicine” and that he would not negotiate a deal with China until the U.S. trade deficit was addressed. Beijing stated that “the markets had spoken” regarding their retaliation strategies.
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Significant declines in futures markets
S&P 500 futures fell 3.5 percent in volatile trading, while Nasdaq futures dropped 4.4 percent, adding to nearly $6 trillion in market losses from the previous week. The pain similarly impacted Europe, with EUROSTOXX 50 futures down 3.6 percent, FTSE futures losing 2.3 percent, and DAX futures declining by 4.0 percent.
Regional impacts and market reactions
Japan’s Nikkei plummeted 6.6 percent, reaching lows not seen since late 2023, while South Korea experienced a 5 percent drop. MSCI’s broadest index of Asia-Pacific shares outside Japan fell a staggering 7.5 percent. Chinese blue chips dropped 6.3 percent as markets awaited Beijing’s response regarding additional stimulus. Taiwan’s main index, which was closed on Thursday and Friday, fell nearly 10 percent, prompting policymakers to restrict short selling.
Read more: Asian stock markets mixed after China central bank keeps rates steady
Emerging markets face challenges
All of emerging Asia also faced significant declines, with India’s Nifty 50 sinking 4 percent. The deteriorating outlook for global growth exerted heavy pressure on oil prices, following sharp losses last week. Brent crude fell $1.35 to $64.23 a barrel, while U.S. crude plummeted $1.395 to $60.60 per barrel.
