Asian markets plunge: Wall Street meltdown triggers Nikkei 225 nosedive

Japan's share benchmark nosedived on Monday, 7 April, after the meltdown Friday on Wall Street over US president Donald Trump’s tariff hikes.

Tokyo's Nikkei 225 index lost nearly 8 per cent shortly after the market opened.

Australia's S&P/ASX 200 tumbled more than 6 per cent.

South Korea's Kospi lost 4.4 per cent.

Oil prices sank further, with US benchmark crude down 4 per cent, or USD 2.50, to USD 59.49 per barrel. Brent crude, the international standard, gave up USD 2.25 to reach USD 63.33 a barrel.

US futures signalled further weakness. The future for the S&P 500 lost 4.2 per cent, while that for the Dow Jones Industrial Average shed 3.5 per cent. The future for the Nasdaq lost 5.3 per cent.

On Friday, 4 April, Wall Street's worst crisis since the Covid-19 pandemic announcement slammed into a higher gear. The S&P 500 plummeted 6 per cent and the Dow plunged 5.5 per cent. The Nasdaq composite dropped 5.8 per cent.

The losses came after matched President Donald Trump's big raise in tariffs announced last week, upping the stakes in a trade war that could end with a recession that hurts everyone.

Even a better-than-expected report on the US job market, usually the economic highlight of each month, wasn't enough to stop the slide.

So far there have been few, if any, winners in financial markets from the trade war. Stocks for all but 14 of the 500 companies within the S&P 500 index fell on Friday, 4 April. The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for economic growth, such as copper, also saw prices slide on worries the trade war will weaken the global economy.

China's response to US tariffs caused an immediate acceleration of losses in markets worldwide. The commerce ministry in Beijing said it would respond to the 34 per cent tariffs imposed by the US on imports from China with its own 34 per cent tariff on imports of all US products beginning 10 April, among other measures.

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The central question looking ahead is: Will the trade war cause a global recession? If it does, stock prices may need to come down even more than they have already. The S&P 500 is already down 17.4 per cent from its record set in February.

Trump seemed unfazed. From Mar-a-Lago, his private club in Florida, he headed to his golf course a few miles away after writing on social media that “THIS IS A GREAT TIME TO GET RICH”.

The Federal Reserve could cushion the blow of tariffs on the economy by cutting interest rates, which can encourage companies and households to borrow and spend. But the Fed may have less freedom to move than it would like.

Fed chair Jerome Powell said on Friday that tariffs could drive up expectations for inflation and lower rates could fuel still more price increases.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.

Much will depend on how long Trump's tariffs stick and what kind of retaliations other countries deliver. Some of is holding on to hope that Trump will lower the tariffs after prying “wins” from other countries following negotiations.

Trump has said Americans may feel “some pain” because of tariffs, but he has also said the long-term goals, including getting more manufacturing jobs back to the United States, are worth it.

On Wall Street, stocks of companies that do lots of business in China fell to some of the sharpest losses.

DuPont dropped 12.7 per cent after China said its regulators are launching an anti-trust investigation into DuPont China group, a subsidiary of the chemical giant. It's one of several measures targeting American companies and in retaliation for the US tariffs.

GE Healthcare got 12 per cent of its revenue last year from the China region, and it has fallen 16 per cent.

In the bond market, Treasury yields fell, but they pared their drops following Powell's cautious statements about inflation. The yield on the 10-year Treasury fell to 4.01 per cent from 4.06 per cent of late Thursday (3 April) and from roughly 4.80 per cent from early this year. It had gone below 3.90 per cent in the morning.