TOKYO – Asia shares mostly fell in Monday trading as worries grow about President Donald Trump imposing tariffs on key U.S. trading partners.
Early trading saw Japan’s Nikkei 225 drop by 2.4% to 38,612.96, while Australia’s S&P/ASX 200 declined by 1.8% to 8,376.30. South Korea’s Kospi also experienced a decrease of 2.9% to 2,443.57. In Hong Kong, the Hang Seng dipped by 1.4% to 19,942.54, and the Shanghai Composite remained slightly lower but stable at 3,250.60.
Analysts said Asian markets were bracing for volatility set off by a possible trade war escalation.
A market strategist at IG, Yeap Jun Rong, pointed out that trade restrictions could lead to reduced global trade flows, shifts in supply chains causing increased costs for businesses, and ultimately resulting in higher inflation.
Last week, Wall Street saw a downward trend with the S&P 500 falling by 0.5% and the Nasdaq composite dropping by 0.3%. This marked the first weekly loss in three weeks for both indexes. Additionally, the Dow Jones Industrial Average experienced a decline of 0.8%.
The selling in New York was broad, with about 75% of the stocks in the S&P 500 closing lower. Technology and energy companies accounted for a large share of the decline.
Investors have been jolted by a report from a Chinese upstart, DeepSeek about developing a cheaper large language model that can complete globally. The disruption raised questions about whether all the investment expected for AI chips is really needed, sending some technology shares tumbling.
Trump’s 25% tariffs on most imports from Canada and Mexico and 10% tariffs on goods from China are to take effect Tuesday. His administration has not said what specific improvements would need to be seen in stopping illegal immigration and the smuggling of fentanyl to merit the removal of the tariffs.
Canada and Mexico ordered retaliatory tariffs on American goods. Canada’s will take effect Tuesday on a range of products, while Canada didn’t give immediate details.
Tariff worries helped push long-term bond yields higher, including the 10-year Treasury, which rose to 4.54% Friday from 4.52% late Thursday. Yields have been generally climbing since September as the U.S. economy has remained much more solid than economists expected.
Also last week, the U.S. Federal Reserve left its benchmark interest rate unchanged, taking a more cautious view on how policies under Trump might impact inflation and the broader economy.
In energy trading, benchmark U.S. crude jumped $1.10 to $73.63 a barrel. Brent crude, the international standard, gained 40 cents to $76.07 a barrel.
In currency trading, the U.S. dollar edged up to 155.55 Japanese yen from 155.18 yen. The euro cost $1.0226, down from $1.0363.
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