Asia-Pacific markets extended their sell-off Monday as fears over a global trade war sparked by U.S. President Donald Trump's tariffs fueled a risk-off mood.
Hong Kong markets led losses in the region, with the Hang Seng Index declining 13.22% to 19,828.30, while the Hang Seng Tech index plunged 17.16% to 4,401.51. Mainland China's CSI 300 plummeted 7.05% to 3,589.44, making this its largest one-day drop since last October.
Chinese markets have taken a hit from Beijing's retaliatory move on Trump's tariffs, Qi Wang, UOB Kay Hian chief investment officer for wealth management, told CNBC's "The China Connection" on Monday.
On a short-term basis, he reckoned the "market will trade on these reactions."
Looking ahead, Wang is keeping a watch on an official response from the European Union, which has said it is preparing countermeasures. He is also watching the U.S.' reactions to China's latest response.
Meanwhile, Wang is mindful of political sentiments in the U.S., especially as American consumers "are definitely not happy with this, and Trump's approval rating is taking a hit."
Japan's benchmark Nikkei 225 fell 7.83% to hit an 18-month low at 31,136.58, while the broader Topix index plummeted 7.79% to 2,288.66. Earlier in the day, trading in Japanese futures was suspended due the market hitting circuit breakers.
In South Korea, the Kospi index plunged 5.57% to 2,328.20, while the small-cap Kosdaq declined 5.25% to 651.30.
Australia's S&P/ASX 200 fell 4.23% to end the day at 7,343,30. The benchmark slid into correction territory with an 11% decline since its last high in February, in its previous session.
India's benchmark Nifty 50 dropped 4.08% while the broader BSE Sensex lost 3.91% as of 1.50 p.m. local time.
Trump's levies to date are estimated to lift the U.S.' effective tariff rate by 17.6 percentage points to 25.3%, British asset manager Schroders noted. This, the firm estimates, translates to around a 2% increase in U.S. prices and will hit growth to a tune of 0.9%.
A simple like-for-like retaliation would have added just another 1.3 percentage point to the effective tariff rate and had a marginal economic impact, Johanna Kyrklund, Schroders' Group Chief Investment Officer and senior economist George Brown wrote in a note.
Asian markets, they noted, are the worst hit. They estimate that China and Vietnam will experience losses exceeding 0.5% of GDP, while the European Union and Japan face a hit of around 0.3% to 0.4% of GDP.
U.S. futures dropped as investors' hopes of the Trump administration having successful negotiations with countries to lower the rates were dashed.
Trump's top economic officials dismissed any fears of inflation and recession, declaring that tariffs would persist irrespective of the markets' reactions.
Stocks in the U.S. sold off sharply last Friday, after China retaliated with fresh tariffs on U.S. goods, sparking fears of a global trade war that could lead to a recession in the world's largest economy.
The Dow Jones Industrial Average dropped 2,231.07 points, or 5.5%, to 38,314.86 on Friday, the biggest decline since June 2020 during the Covid-19 pandemic.
The S&P 500 nosedived 5.97% to 5,074.08, its biggest decline since March 2020.
Meanwhile, the Nasdaq Composite, which captures many tech companies that sell to China and manufacture there as well, dropped 5.8%, to 15,587.79. This takes the index down by 22% from its December record, representing a bear market in Wall Street terminology.
— CNBC's Brian Evans, Alex Harring and John Melloy contributed to this report.
