Asian markets suffered massive losses on Monday, April 7, in what traders described as a “black day” for equities, after China retaliated against the United States with a sweeping round of new tariffs, escalating fears of a global recession.
The selloff sent investors fleeing from risk assets, triggering the worst trading day in the region since the pandemic.
Market participants dumped shares across sectors, sparking a domino effect of losses. Hong Kong led the rout with a staggering 10.7 percent drop, while Tokyo plummeted 6.2 percent and Taipei shed over 9 percent. Shanghai fell by more than 6 percent and Singapore by 8 percent. Seoul also dropped over 5 percent, triggering a sidecar mechanism that briefly halted certain trades — the first such move in eight months.
No sector was spared in the bloodbath. Tech giants Alibaba and JD.com fell 14 percent and 13 percent, respectively. In Japan, SoftBank lost over 10 percent, and Sony slipped 9.6 percent. The downturn extended across carmakers, banks, casinos, and energy firms.
The dramatic selloff followed Beijing’s announcement of retaliatory tariffs of 34 percent on all US goods starting April 10. The move came in response to President Donald Trump’s imposition of sweeping tariffs last week, which he defended as long-overdue corrections to years of unfair trade practices.
In a further blow, China also introduced export controls on seven rare earth elements critical to various high-tech industries. These include gadolinium, widely used in medical imaging, and yttrium, essential in electronics.
Hopes that the US might reconsider the policy in light of market turmoil were quashed when Trump doubled down on Sunday, insisting he would only negotiate if trade deficits were resolved. He denied intentionally provoking a market crash, stating, “Sometimes you have to take medicine to fix something.”
The ripple effect extended to commodities, with oil and copper both sinking. West Texas Intermediate crude fell 2.7 percent to $60.31 per barrel, and Brent crude dropped to $63.84. Copper, a bellwether for industrial demand, continued its downward slide amid fears of slowing global growth.
Wall Street futures pointed to another grim session, following Friday’s near 6 percent losses across major US indices. That selloff was compounded by Federal Reserve Chair Jerome Powell’s warning that the tariffs would drive up inflation and slow growth, elevating the risk of higher unemployment.
Economists are sounding the alarm over the potential fallout. Steve Cochrane, chief Asia-Pacific economist at Moody’s Analytics, warned, “We could see a recession happen very quickly in the US, and it could last through the year or so. And if there’s a recession in the US, of course, China will feel it as well.”
Analysts said the Federal Reserve now faces a difficult balancing act — supporting a flagging economy with rate cuts while trying to contain inflation driven by tariffs. “Powell’s hands are tied,” said Stephen Innes of SPI Asset Management. “The Fed’s inflation mandate is forcing it to keep the safety net rolled up while asset prices get torched.”
Tim Waterer, chief market analyst at KCM Trade, summed up the market’s anxiety: “Traders are nervously watching the two biggest economies going toe to toe on tariffs and are fearing that both could receive knockout blows from a prolonged economic fight.”
With neither Washington nor Beijing showing signs of backing down, investors continue to retreat from risk assets, sending equities into freefall and rattling confidence across the globe.
Key Figures Around 0400 GMT:
Tokyo – Nikkei 225: DOWN 6.2% at 31,699.95
Hong Kong – Hang Seng Index: DOWN 10.7% at 20,405.96
Shanghai – Composite: DOWN 6.3% at 3,130.17
West Texas Intermediate: DOWN 2.7% at $60.31 per barrel
Brent Crude: DOWN 2.7% at $63.84 per barrel
Dollar/Yen: DOWN at 146.33 from 146.98
Euro/Dollar: DOWN at $1.0950 from $1.0962
Pound/Dollar: DOWN at $1.2889 from $1.2893
Euro/Pound: DOWN at 84.96 pence from 85.01
New York – Dow: DOWN 5.5% at 38,314.86 (Friday close)
London – FTSE 100: DOWN 5.0% at 8,054.98 (Friday close)