Japan’s Nikkei share average plunged nearly 9% on Monday, with bank stocks dropping as much as 17%, amid concerns over a tariff-induced global recession. The broader Topix index also fell 8%. The sell-off in Japanese equities has been particularly severe, with banking shares bearing the brunt, dropping 30% over the past three sessions. The European and US stock markets are also heading for heavy losses, with the Eurostoxx 50 index expected to fall by around 4%.
The global sell-off was triggered by fears of a global trade war following Donald Trump’s announcement of sweeping tariffs. Trump has said that foreign governments will have to pay a significant amount to lift the tariffs, which he described as “medicine” needed to fix trade imbalances. Asian markets, including Hong Kong, China, Taiwan, and South Korea, all experienced sharp declines in response to the tariffs.
The situation has raised concerns among analysts about the impact on global economic growth. The Greek central bank governor warned that Trump’s tariffs could slow euro area economic growth by 0.5-1 percentage points. Governments around the world are considering their responses to the escalating trade tensions, with Taiwan offering zero tariffs as a basis for negotiations, and South Korea preparing support measures for sectors affected by the tariffs.
The turmoil in the markets has also affected base metal prices in China, with copper prices hitting a three-month low. In Australia, the share market lost over $160 billion in value, while the Australian dollar fell to its lowest level since the beginning of the Covid-19 pandemic against the US dollar. Overall, the situation continues to be volatile, with analysts warning of further market turbulence unless there is a resolution to the trade dispute.
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