Asian stock markets plunged on Tuesday, following Wall Street’s lead, amid fears of a US recession induced by a trade war.
Tokyo’s Nikkei index lost 0.63%, closing at 36,793.11 points, after dropping nearly 3% during trading, while the broader Topix index fell 1.11% to 2,670.72 points. Seoul’s stock market fell 1.28% and Sydney’s dropped 0.91%.
Asian markets mirrored the sharp decline seen on Wall Street the previous day, where the tech-heavy Nasdaq index tumbled 4%, as investors worried about a potential recession in the United States.
Investors unsettled by Trump statements
Tech stocks in Tokyo, including Renesas (-2.62%), Hitachi (-2.10%), and investment giant SoftBank (-2.75%), suffered similarly to major US companies like Microsoft and Nvidia.
Statements made by Donald Trump on Sunday unsettled investors: the US president was vague regarding a potential recession, referring to the situation as a transition period.
Analyst Kosuke Oka of Monex Securities predicted that the downward trend is likely to continue since the US market has shown signs of risk aversion due to uncertainty surrounding the US economy and Trump’s trade policies.
Nikkei falls to six-month low
The Nikkei index briefly dipped below 36,000 points for the first time since September.
If uncertainty related to tariffs starts affecting US economic indicators, it will eventually impact Asia through slowed investment in manufacturing and reduced exports, Michael Wan of MUFG bank commented.
Markets are also bracing for Washington’s possible implementation of reciprocal tariffs targeting all its trade partners starting in early April.
Bitcoin falls, then rebounds slightly
The Japanese yen, considered a safe haven amid uncertainty, strengthened slightly before stabilising around 06:30 GMT (07:30 Brussels time) at 147.34 yen per US dollar.
Bitcoin attempted a rebound (+1.38% to $80,360) after sliding nearly 10% on Monday, hit by its status as a speculative investment and investor disappointment over the lack of concrete support measures for cryptocurrencies from the Trump administration.
At 02:30 GMT, Hong Kong’s Hang Seng index fell 0.82% to 23,588 points. On the mainland, Shanghai’s composite index dropped 0.24%, and Shenzhen’s index slipped by 0.39%.
New Chinese AI agent sparks data security concerns
Hong Kong-listed tech stocks such as Alibaba (-2.01%), JD.com (-2.53%), and Tencent (-0.87%) were also under pressure, as the market absorbed the emergence of a new Chinese competitor to the US’s ChatGPT (OpenAI).
'Manus,' a general AI agent recently launched by a Chinese start-up Butterfly Effect that is capable of acting autonomously, has attracted attention from AI professionals since last week, sparking data security concerns.
“Manus raises questions about potential workforce replacement in China at a time when the labour market and consumption are already weak, though it may boost market morale, investment, and employment in the tech sector, possibly increasing productivity in the medium term,” MUFG's Wan noted.
The oil market remained under pressure due to heightened uncertainty about the health of the US economy and energy consumption. As of 06:30 GMT (07:30 Brussels time), US WTI crude dipped 0.06% to $65.99 per barrel, while Brent crude from the North Sea edged up 0.06% to $69.30 per barrel.
