The financial market crash triggered by US President Donald Trump's tariffs continued on April 7. Asian stocks plunged at the open, and US stock futures showed that last week's $5 trillion loss was not the end of the story.
Points of attention
- US President Donald Trump's tariff policies have led to an unprecedented fall in world financial markets, with the MSCI Asia Pacific index experiencing its largest drop in 10 years.
- Investors are seeking safe havens amid the sharp decline in global financial markets, with Asian markets facing significant panic as key indicators such as Chinese stocks in Hong Kong plummet.
- Concerns over a global recession are growing, leading to expectations that the US Federal Reserve may respond with a rate cut sooner than previously anticipated.
The sharp decline in global financial markets continued on April 7
The MSCI Asia Pacific index fell 7.9%, its biggest drop since October 2008, after Trump made harsh remarks about his tariff policies. The US president told reporters on Sunday night to "forget about the markets for a second."
I don't want anything to go wrong, but sometimes you have to take medication to fix things.
Panic has gripped many Asian markets. A key gauge of Chinese stocks in Hong Kong fell more than 9%. The yen surged as investors sought safe havens, and Brent crude fell more than 4%. Nasdaq futures fell more than 4%.
Taiwan's stock index fell 9.8% after markets reopened after the weekend, its biggest drop ever. Japanese stock futures were briefly halted after a circuit breaker was triggered, while Nintendo and Sony shares fell more than 10%.
Investor concerns peaked when Trump made it clear that, unlike previous financial crises, the US government was in no hurry to help them, and China said it would impose corresponding tariffs against the US.
As the markets continued to shake, some people close to Trump urged him to reconsider his plans before the April 9 deadline for retaliatory tariffs to take effect.
"I firmly believe that imposing tariffs on April 9th against the entire world, which far exceed those levied on us, is a mistake," wrote billionaire Bill Ackman, founder of the Pershing Square hedge fund and a key Trump supporter.
In his post, Ekman wrote that Trump is not "infallible" and called for a 90-day delay in imposing tariffs.
"This is not what we voted for," he wrote in a separate post.
The massive sell-off has heightened fears of a global recession and increased expectations that the US Federal Reserve will try to respond.
“We estimate a 50% probability of a recession in the US economy,” TD strategists, including Oscar Munoz, wrote in a note dated April 6. They added that they are moving their expectations for a Fed rate cut from July to June.
