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US stock-index futures and Asian shares dropped sharply in early trading after Donald Trump’s administration indicated that sweeping tariffs would be kept in place despite fears they could induce a global economic recession.
Contracts tracking the blue-chip S&P 500 fell 3.8 per cent and those for the tech-heavy Nasdaq 100 slid 4.8 per cent. Trading activity is typically light early in the Asian morning, which can exacerbate volatility. In Japan, the Topix index was down 7.8 per cent on Monday, while the Nikkei 225 declined 7.3 per cent shortly after the open. Australia’s S&P/ASX 200 and Korea’s Kospi were also down more than 5 per cent.
The declines come after more than $5tn was erased from the S&P 500 on Thursday and Friday at the end of its worst week since the onset of the coronavirus pandemic in 2020.
Trump’s move to upend the global trade order by implementing huge levies on US imports has deepened concerns about the trajectory of the world’s economy. China announced retaliatory duties on Friday of 34 per cent.
Commodities also sustained heavy losses, with West Texas Intermediate, the US benchmark, falling 3.4 per cent to $59.80 a barrel — below the price needed by most shale producers to break even. International benchmark Brent dropped 3.4 per cent to $63.35.
LME copper, widely seen as a proxy for growth because of its industrial usage, fell more than 7 per cent to $8,690 a tonne. Bitcoin fell 0.8 per cent to $78,198 a token. The US dollar declined 0.3 per cent against a basket of its largest trading partner currencies, while the Japanese yen rose 0.8 per cent to JPY145.6 a dollar. The offshore Chinese renminbi, which trades freely, fell 0.2 per cent to Rmb7.31 per dollar.
At one stage, the Topix index was down as much as 9.6 per cent, with many stocks untraded due to a glut in sell orders.
Shares in Toyota fell almost 7 per cent, while Nintendo declined 9.6 per cent after news that it delayed pre-orders for its new Switch 2 console in the US following the tariff announcement. SoftBank fell 12.7 per cent while MUFG, one of the largest Japanese banks, was down 15 per cent.
“Investors are closing down a lot of positions in light of the volatility,” said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas. “[The falls are] a reflection of some of the positioning unwind, especially the foreign positioning in Japanese banks and financials. “
Trump showed no sign he would retreat from his tariffs plan on Sunday.
“We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A. They are already in effect, and a beautiful thing to behold,” he wrote on Truth Social.
Asked later about the market falls, Trump told reporters that “sometimes you have to take medicine to fix something”.
Earlier, Treasury secretary Scott Bessent dismissed the “short-term” market reaction to the president’s aggressive tariffs, telling NBC that the White House will “hold the course”. Asked whether Trump’s tariffs were negotiable, he said: “We’re going to have to see what [other] countries offer and whether it’s believable”.
His comments followed a warning from Federal Reserve chair Jay Powell that the tariffs would stoke “higher inflation and slower growth”.
The benchmark 10-year US treasury yield, closely watched by Trump administration officials, fell 0.08 percentage points to 3.91 per cent as investors piled into bonds globally. Japan’s 10-year JGB yield fell 0.07 percentage points to 1.11 per cent, while China’s 10-year yield fell 0.09 percentage points to 1.64 per cent.
Activist investor Bill Ackman, who vocally backed Trump during the election campaign, posted on X that “massive and disproportionate tariffs” risked “destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital”.
He urged Trump to call “time out” on Monday.
The S&P 500’s more than 10 per cent decline over Thursday and Friday is only the fourth time in the past 85 years — after the 1987 crash, in 2008 during the financial crisis and in early 2020 — that the index has fallen so far so fast, according to Deutsche Bank.
