Asian Shares Mostly Fall on Tariff Worries
Tokyo, Japan - Asia shares witnessed a predominantly downward trend in Monday's trading session amid mounting concerns over President Donald Trump's impending tariffs on key U.S. trading partners.
Japan's Nikkei 225 benchmark shed 2.4% in early trade, dropping to 38,612.96, while Australia's S&P/ASX 200 declined 1.8% to 8,376.30. South Korea's Kospi also experienced a 2.9% loss, reaching 2,443.57.
Hong Kong's Hang Seng slipped 1.4% to 19,942.54, and the Shanghai Composite Index posted a moderate dip to 3,250.60.
Analysts caution that Asian markets brace for heightened volatility due to potential trade war escalation. "Trade restrictions may lead to diminished global trade volumes, supply chain disruptions resulting in increased business costs, and subsequent inflation," warns Yeap Jun Rong, market strategist at IG.
Wall Street closed last week with losses, with the S&P 500 dropping 0.5% and the Nasdaq Composite declining 0.3%. All major indices faced their first weekly loss in three weeks. The Dow Jones Industrial Average declined 0.8%.
In New York, the sell-off was widespread, with approximately 75% of stocks listed on the S&P 500 closing lower. Technology and energy sectors contributed significantly to the market downturn.
A report by Chinese startup DeepSeek regarding the development of a more cost-effective large language model has sparked concerns about the necessity of AI chip investments. Consequently, several tech shares plummeted.
Trump's 25% tariffs on most Canadian and Mexican imports and 10% tariffs on Chinese imports are set to take effect on Tuesday. His administration has provided no specific conditions for the removal of these tariffs in exchange for mitigating illegal immigration and fentanyl smuggling.
Canada and Mexico have announced retaliatory tariffs on American goods, with Canada's taking effect on Tuesday. Specific details from both countries remain undisclosed.
Amid tariff concerns, long-term bond yields have increased. The 10-year Treasury rose to 4.54% on Friday from 4.52% on Thursday. Yields have been on a gradual upward trajectory since September, as the U.S. economy continues to exceed expectations.
In other news, the U.S. Federal Reserve maintained its benchmark interest rate unchanged last week, adopting a more cautious stance on the potential impact of Trump's policies on inflation and the overall economy.
In energy trading, the benchmark U.S. crude price surged by $1.10 to $73.63 per barrel. Brent crude, the international standard, rose 40 cents to $76.07 per barrel.
Currency trading saw the U.S. dollar slightly gain value against the Japanese yen, rising to 155.55 from 155.18. The euro, however, faced a decline from $1.0363 to $1.0226.