Asian Equities Fall Amid Growing Uncertainty Over Trump’s Trade Policies
Global Markets Suffer Volatility as Tariffs Take Effect
HONG KONG: Asian equities mostly fell on Wednesday as investors fret over President Donald Trump’s ever-changing trade policies, amid increasing concern that his tariffs could send the US economy into recession.
Tariffs Take Effect
In the latest move, sweeping 25 percent levies on all US aluminium and steel imports came into effect at midnight in Washington (0400 GMT Wednesday), hitting numerous nations from Brazil to South Korea, as well as the European Union. This follows Trump’s threat to double tariffs on Canada after the province of Ontario imposed an electricity surcharge on three US states. The president called that off after Ontario halted the charge.
Uncertainty and Volatility
The on-off nature of the trade policies has fuelled uncertainty in markets, and has sent the VIX "fear index" of volatility to its highest level since August. Traders appeared largely unmoved by Trump’s attempt to soothe worries over a recession after he warned at the weekend of "a period of transition" and refused to rule out a downturn.
Economic Concerns
Nicole Inui at HSBC wrote in a note: "The back and forth on tariff announcements is playing havoc with consumer and business confidence: policy uncertainty is at a record high, consumer confidence dropped sharply and small business optimism has pared back. Consensus GDP forecasts were revised lower for the first time in eight months and market chatter about recession is creeping higher."
Asian Markets in Red
After another selloff in New York, Asian traders were also in a dour mood. Tokyo edged up with Singapore, Seoul, Jakarta, and Taipei. However, Hong Kong, Shanghai, Wellington, Mumbai, Bangkok, and Manila were in the red, with Sydney down more than one percent, on concerns about the impact of Trump’s latest tariffs on Australia’s economy.
US Inflation Data in Focus
Also in focus on Wednesday is the release of key US consumer inflation data, which the Federal Reserve will keep a close eye on as it tries to determine monetary policy in light of the latest moves by Trump. There is a fear that the tariffs, and plans to slash taxes, regulation, and immigration will fan inflation again, forcing the bank to hold borrowing costs for longer or even hike them.
Global Markets in Crisis
Meanwhile, analysts said high uncertainty in US markets at the moment was making other regions more attractive as investors look for more stability. "For years, the US has been the undisputed leader of global markets, fuelled by aggressive fiscal spending, tech dominance, and a strong consumer," said Charu Chanana, chief investment strategist at Saxo markets. "But cracks are starting to show. Investors are increasingly looking overseas as concerns mount over US stock valuations, monetary policy, and economic uncertainty."
Key Figures
Tokyo – Nikkei 225: UP 0.1 percent at 36,819.09 (close)
Hong Kong – Hang Seng Index: DOWN 1.1 percent at 23,520.71
Shanghai – Composite: DOWN 0.2 percent at 3,371.92 (close)
Euro/dollar: DOWN at $1.0900 from $1.0915 on Tuesday
Pound/dollar: DOWN at $1.2926 from $1.2954
Dollar/yen: UP at 148.20 yen from 147.70 yen
Euro/pound: UP at 84.32 pence from 84.26 pence
West Texas Intermediate: UP 0.1 percent at $66.34 per barrel
Brent North Sea Crude: UP 0.1 percent at $69.66 per barrel
New York – Dow: DOWN 1.1 percent at 41,433.48 points (close)
London – FTSE 100: DOWN 1.2 percent at 8,495.99 (close)
Conclusion
The ongoing uncertainty surrounding President Trump’s trade policies has sent global markets into a tailspin, with Asian equities falling on Wednesday. The tariffs have sparked concerns over the potential impact on the US economy and the global economy as a whole. As investors look for more stability, they are increasingly turning to other regions, such as Europe and Asia, which are seen as less volatile.
FAQs
Q: What are the latest developments in the US-China trade war?
A: The US has imposed 25% tariffs on all US aluminium and steel imports, while China has retaliated with tariffs on American goods.
Q: How is the US economy affected by the trade war?
A: The tariffs have led to concerns over the potential impact on the US economy, with some economists predicting a recession.
Q: What is the current state of global markets?
A: Global markets are experiencing high volatility, with many countries’ stock markets falling in value.