NEW DELHI: Asian markets on Friday slumped with Tokyo’s Nikkei 225 nosediving over 5.6% in early trade, as investors reacted to mounting fears that the US-China trade war is spiralling out of control.
The fresh jitters come a day after Wall Street erased much of its historic rally, triggered earlier in the week by President Donald Trump’s temporary suspension of tariffs on several allies—excluding China.
By late morning, Japan’s benchmark index was down 4.7% at 32,969.95. South Korea’s Kospi shed 1.6% while Australia’s ASX 200 lost 2.1%. The yen climbed sharply, with the dollar falling to 143.48 yen from about 146 yen on Thursday, a clear signal of investors rushing to safer assets. Gold also touched a new high as risk-off sentiment spread.
The renewed sell-off was sparked after the White House clarified that Chinese imports will now face a 145% tariff rate, once earlier layers are included. Beijing swiftly responded with 84% tariffs on US goods and announced plans to reduce the number of Hollywood films imported—shaking stocks like Warner Bros. Discovery, which plunged 12.5%.
Japan
- Nikkei 225 plunged 5.6% initially, later trading down 4.7% at 32,969.95 by mid-morning in Tokyo.
- The yen surged against the US dollar, trading at ¥143.48, stronger than ¥146 the day before.
China
- Hong Kong’s Hang Seng edged down 0.4% to 20,606.04 and Shanghai’s lost 0.2% to 3,218.94.
- Taiwan’s Taiex gained 1.5% as investors expect more orders would transfer to Taiwan under the worsening China-US trade war.
- Warner Bros. Discovery stock plummeted 12.5%, Disney fell 6.8% on this news.
- China Film Administration stated that audiences would be less receptive to US content due to trade tensions.
- Beijing is seeking alliances with other countries to form a united front against
Trump ’s tariff regime.
South Korea
- Kospi index dropped 1.6% to 2,400.34 amid broader regional sell-off linked to US-China trade tensions.
United States
- S&P 500 fell 3.5% Thursday, retracing much of Wednesday’s 9.5% gain.
- Dow Jones dropped 1,014 points (2.5%), closing at 39,593.66.
- Nasdaq sank 4.3%, ending at 16,387.31.
- White House clarified tariffs on Chinese imports will be 145%, not 125% as Trump earlier claimed.
- The Japanese yen saw a strong rally, appreciating to 143.48 against the US dollar from 146 in just a day, as global investors sought refuge amid growing economic uncertainty.
- 10-year Treasury yield rose again to 4.40% after falling to 4.30% post-inflation data.
- Crude oil prices dipped:
- US crude at $59.70 per barrel, down 37 cents.
- Brent crude at $63.03 per barrel, down 30 cents.
Europe
- European Union to pause trade retaliation for 90 days to allow negotiations.
- The euro also climbed to $1.1305, up from $1.1195, reflecting a broad pullback in dollar demand.
- Europe’s markets mirrored Wall Street’s caution amid bond market jitters and US-China tensions.
Wall Street wipes out historic gains
US markets suffered their worst single-day drop in months on Thursday, effectively erasing the optimism sparked by earlier trade pauses. The S&P 500 slid 3.5%, closing at 5,268.05, while the Nasdaq suffered an even steeper fall of 4.3%. The Dow Jones tumbled 2.5%, shedding over 1,000 points to end at 39,593.66. The selloff was broad-based, with tech, financials, and consumer stocks all taking heavy hits. The plunge reflected deepening investor anxiety over rising tariffs, recession risks, and the possibility of a global slowdown.
Trump doubles down on China tariffs
President Donald Trump confirmed on Thursday that his administration will move forward with a massive 145% tariff package on Chinese goods, significantly higher than the 125% figure floated earlier. While the White House recently paused tariffs on allies like the EU, Japan, and the UK, Trump framed the China move as a “necessary correction” to decades of unfair trade practices. “We’re bringing the jobs back. It’s tough love, but we’ll win,” he told reporters. Businesses and economists warned the steep duties could raise consumer prices and disrupt supply chains, particularly in electronics, automotive, and machinery sectors.
China hits back with 84% tariffs, cuts Hollywood imports
Beijing responded swiftly to Trump’s tariff escalation, slapping 84% tariffs on key American exports including agricultural goods, electronics, and semiconductors. The Chinese government also announced a sharp reduction in the number of American films allowed to screen in China, a move that dealt a heavy blow to Hollywood. Shares of Warner Bros. Discovery plunged 12.5%, while Disney fell 6.8% amid fears of long-term market access losses. Analysts said the film industry, already grappling with streaming disruptions, could face major revenue hits if Chinese market access continues to narrow.
Gold at record high, oil prices slip
Gold prices hit an all-time high as nervous investors piled into safe-haven assets amid deepening market turmoil. Uncertainty over global trade, equity volatility, and weakening currencies fuelled demand for the precious metal. Meanwhile, oil prices moved in the opposite direction. US crude fell 37 cents to $59.70 a barrel, while Brent crude dipped to $63.03. Traders pointed to concerns over potential demand destruction from slowing global growth and rising tariffs.
EU pauses retaliation, but warns of ‘bazooka’
The European Union said it would suspend its planned $22.4 billion in retaliatory tariffs against the United States for 90 days, offering a diplomatic window for negotiations. However, EU officials issued a stern warning, saying they are prepared to use their newly-adopted “anti-coercion instrument” — dubbed the ‘bazooka’ — if talks collapse. This tool gives the EU sweeping powers to impose countermeasures against economic bullying. While the pause was welcomed by business groups, Brussels made it clear that its patience has limits.
Trump says turmoil is ‘cost of transition’
Amid mounting market losses and global backlash, President Trump remained defiant, describing the economic upheaval as a “transition problem” necessary to achieve long-term prosperity. “We’ve been taken advantage of for decades. This is the correction — and when it’s over, it’ll be beautiful,” Trump said. He dismissed concerns about short-term pain, insisting that the tariff strategy would ultimately boost American manufacturing and reduce reliance on China. Critics, however, argue that Trump is underestimating the ripple effects on consumers, businesses, and global stability.
(With inputs from agencies)
