By Dow Jones Newswires Staff
Asian equities tumbled as markets saw some of their worst fears come true: a slate of sweeping U.S. tariffs that could inflict economic damage and disrupt industries.
Indexes in Japan and South Korea followed U.S. stock futures lower at Thursday's open, as investors took in President Trump's announcement of an across-the-board 10% tariff on all imports that kicks in April 5.
Countries on the White House's about 60-strong list of "bad actors" on trade will be hit by sharper levies that take effect on April 9.
China faces a 34% tariff that will be stacked on existing duties, meaning that the base tariff rate on Chinese imports will be 54% after April 9. Elsewhere in Asia, Japan will get a 24% tariff, Taiwan 32%, South Korea 25%, India 26% and Vietnam 46%.
"We would characterize this slate of tariffs as 'worse than the worst-case scenario' the street was fearing," Wedbush analysts Daniel Ives and Scott Devitt said in a note.
Japan's Nikkei Stock Average was down 2.9% in the early afternoon, with declines among shares of automakers and banks. Japanese banking stocks fell sharply on heightened uncertainty over the country's economic outlook and the pace of further rate increases by the central bank.
In South Korea, the benchmark Kospi pared losses to last sit 0.8% lower. Semiconductor, battery and auto stocks were in retreat.
Shares in Australia were also hit, even though the country got off relatively lightly from Trump's so-called "discounted reciprocal tariffs."
Australia's benchmark index was down 1.9% earlier in the session, before clawing back ground to end 0.9% lower.
In India, the benchmark Sensex opened 0.5% down, dragged by tech stocks.
"Liberation Day" was worse than what many analysts had been expecting, though there is speculation that there is room for negotiation. Trump has walked back tariff announcements before and it remains to be seen if countries will try to bargain for lower rates or exemptions.
Japan's trade minister said Tokyo will continue asking the U.S. to exempt the Asian country from new U.S. tariffs. Malaysian officials said they were not considering retaliatory measures but would engage with U.S. authorities on "fair trade relations."
South Korea said it would prepare "emergency support measures" for the country's auto sector and other industries that will be hit by tariffs.
"Given that the gravity of a global tariff war has now become a reality, we need to pour all of the government's capacity into overcoming this commerce crisis," South Korea's acting president Han Duck-soo said.
The tone from China was sharper, with the commerce ministry vowing take "resolute" countermeasures.
Chinese stocks started the day lower and extended losses in the afternoon, with consumer product and home appliance makers sliding. Hong Kong's benchmark Hang Seng Index was 1.8% and the Shanghai Composite Index was 0.5% lower.
Central banks also weighed in. The Reserve Bank of Australia said tariffs could pose substantial headwinds to global growth, chilling investment and spending, while the Monetary Authority of Singapore said it is monitoring the situation and stands ready to curb excessive volatility in Singapore markets.
Moves in currency markets reflected the risk-off mood, with investors piling into the Japanese yen, a traditional safe haven. The yen strengthened sharply against other G-10 and Asian currencies in early trade, touching 148.04 yen against the dollar.
Most emerging-market Asian currencies took a hit from the tariff news, with the Chinese yuan weakening to two-month lows against the dollar in both offshore and onshore markets.
Yields on most global government bonds slid, reflecting unnerved investors. U.S. 10-year Treasury yields tested key support level at 4.11%, a level which it hasn't broken since October last year, Sucden Financial Research said in a note. This reflects safe-haven demand and rising worries about growth, it said.
Gold hit yet another record high as investors sought refuge in haven assets, before reversing course. Spot gold was last down 0.2% after earlier touching a fresh high of $3,167.24/ounce on the ICE platform.
Oil was down about 2% as tariffs fueled worries about demand. LME three-month copper was 1.6% lower amid concerns about the impact of tariffs on global growth.
A 25% tariff on foreign-made autos and car pars is also set to kick in later, adding to the downbeat mood.
"We are not at the end point in terms of tariffs news," CBA senior economist and currency strategist Kristina Clifton said.
Write to Singapore editors at singaporeeditors@dowjones.com
(END) Dow Jones Newswires
April 03, 2025 02:01 ET (06:01 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
