HONG KONG — The specter of a US recession sent tremors through Asian stock markets on Tuesday, triggering widespread sell-offs as investor confidence wavered amid escalating trade tensions and growing concerns over economic instability. The financial landscape was thrown into turmoil following US President Donald Trump’s recent refusal to rule out the possibility of a severe economic downturn, fueling uncertainty across global markets.
The reaction was swift and severe. The MSCI Asia-Pacific index, excluding Japan, plummeted by more than 1% as investors scrambled to reassess risks. Japan’s benchmark Nikkei 225 suffered an initial drop of nearly 3% in morning trading before recovering marginally by midday. South Korea’s KOSPI index faced similar pressure, declining as much as 2.5%, while Taiwan’s TAIEX was hit even harder, at one point losing close to 3%. In Australia, the S&P/ASX 200 slid by as much as 1.7%, and in Hong Kong, the Hang Seng Index registered a milder decline, retreating less than 1%.
The sell-off was particularly pronounced in the technology sector, where major Asian companies saw their stock prices take a significant hit. In Japan, leading electronics manufacturers Sony and Hitachi each saw shares tumble by over 4.5% in the early session, while telecommunications and investment giant SoftBank fell by as much as 4.4%. Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a key supplier to Apple, experienced a loss exceeding 3%. Foxconn, another crucial Apple supplier, followed a similar downward trajectory, while South Korea’s Samsung Electronics, a dominant force in the global semiconductor industry, suffered a decline of more than 2%.
Investor jitters have been amplified by the Trump administration’s aggressive trade policies, which have led to escalating economic friction with the United States’ key trading partners. While Wall Street initially responded with optimism to Trump’s second term in office, persistent uncertainty over the administration’s economic direction has given rise to mounting volatility. The president has continued to upend global trade relationships, imposing sweeping tariffs on imports from Canada, Mexico, and China.
His latest moves have only exacerbated market anxieties. Trump recently threatened to introduce a 25% tariff on all imports from Mexico and most goods from Canada, though the implementation has been postponed until next month. Meanwhile, in a move that sent shockwaves through global trade networks, the US government last week doubled tariffs on all Chinese imports to 20%, prompting Beijing to retaliate with fresh duties on American agricultural products. These measures, which officially took effect on Monday, have intensified concerns that the economic standoff between the world’s two largest economies will persist, further straining financial markets.
Investor sentiment was further shaken by Trump’s ambiguous remarks regarding the US economic outlook. During an appearance on Sunday Morning Futures With Maria Bartiromo on Fox News, the president refrained from providing a definitive answer when asked about the possibility of a recession, stating only, “I hate to predict things like that.” Instead, he referred to the current economic conditions as a “period of transition,” a statement that did little to reassure investors already wary of potential financial turbulence.
The uncertainty surrounding the US economy has been reflected in sharp declines across Wall Street. On Monday, the Nasdaq Composite suffered its steepest single-day loss since September 2022, plunging 4% as technology stocks took a significant hit. Tesla, one of the major drivers of the index, was among the worst-performing stocks. The Dow Jones Industrial Average shed 890 points, closing 2.08% lower, while the S&P 500 recorded a steep decline of 2.7%. The magnitude of these losses effectively erased all gains made by the three major US indices since Trump’s re-election.
Adding to market unease, Delta Air Lines revised its earnings forecast downward on Monday, citing weakening consumer and corporate confidence as the driving factors behind softer demand. The airline’s announcement underscored broader concerns over the economic outlook, reinforcing speculation that a downturn may be imminent.
The instability was not confined to the US and Asia. European markets also felt the strain, with the Stoxx Europe 600, a key benchmark for the region, closing 1.3% lower on Monday as investor apprehension over the global economy continued to grow.
As financial markets brace for continued volatility, investors remain on high alert for potential shifts in economic policy or market conditions that could offer some semblance of stability. However, with recession fears mounting and trade tensions showing no signs of easing, uncertainty continues to loom large over global markets.
