Hong Kong — Asian stock markets tumbled on Tuesday as growing concerns over a looming economic recession in the United States sent shockwaves across the global financial landscape. Investors in the region reacted nervously after US President Donald Trump refused to rule out the possibility of a severe downturn, exacerbating fears of prolonged instability in the world’s largest economy.
The MSCI Asia-Pacific index, which excludes Japan, fell by more than 1% as uncertainty gripped investors. Japan’s Nikkei 225 suffered a steep decline of nearly 3% in early trading before recovering some ground by midday. South Korea’s KOSPI was hit hard, sliding as much as 2.5%, while Taiwan’s TAIEX saw an even sharper drop, plummeting close to 3% at one point. Meanwhile, Australia’s S&P/ASX 200 lost up to 1.7%, and Hong Kong’s Hang Seng Index registered a more moderate decline of less than 1%.
The sell-off was particularly pronounced in the technology sector, where major Asian firms saw their stock prices take a significant hit. In Japan, tech behemoths Sony and Hitachi suffered steep declines of more than 4.5% during the morning session, while SoftBank tumbled as much as 4.4%. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, and Apple’s key supplier, Foxconn, both shed over 3% of their value. South Korea’s Samsung, a heavyweight in the global semiconductor industry, fell by more than 2%.
Investor sentiment has been rattled by escalating trade tensions between the US and its key economic partners, particularly China. Since assuming his second term, President Trump has pursued an aggressive trade policy that has disrupted global markets, with heavy tariffs levied on imports from Canada, Mexico, and China. While financial markets initially responded positively to his re-election, optimism has given way to persistent volatility, with concerns mounting over how these policies might impact economic growth.
In a move that has further stoked fears, Trump recently threatened to impose a sweeping 25% tariff on all imports from Mexico and most goods from Canada. Although the implementation has been delayed until next month, businesses and investors remain on edge. Last week, the US administration doubled tariffs on all Chinese imports to 20%, prompting Beijing to retaliate with its own set of tariffs targeting American agricultural products. These measures took effect on Monday, intensifying fears of a prolonged trade war that could weigh heavily on global economic growth.
The latest market turmoil was triggered by Trump’s comments—or lack thereof—on the US economic outlook. During an appearance on Sunday Morning Futures With Maria Bartiromo on Fox News, Trump dodged a direct question about the likelihood of a recession, stating, “I hate to predict things like that.” He acknowledged, however, that the US economy was undergoing a “period of transition,” a phrase that did little to reassure investors already wary of economic turbulence.
Nigel Green, the founder and chief executive of financial consultancy deVere Group, warned in a note to clients on Monday that US markets were at risk of a correction—defined as a drop of at least 10% from recent highs—following an extended period of outperformance compared to other major economies.
“The warning signs are stacking up. Consumer sentiment is slipping, inflation remains persistent, and initial jobless claims are climbing,” Green stated, painting a bleak picture of the economic trajectory.
Wall Street’s reaction to these concerns was swift and severe. On Monday, the Nasdaq Composite suffered its sharpest single-day decline since September 2022, plunging 4% as tech stocks bore the brunt of the sell-off. Tesla was among the worst hit, dragging the index down further. The Dow Jones Industrial Average closed 890 points lower, registering a 2.08% drop, while the broader S&P 500 tumbled 2.7%. The staggering losses erased all gains the three major US indices had accumulated since Trump’s re-election.
Adding to the bleak outlook, Delta Air Lines slashed its earnings forecast on Monday, citing weakening consumer and corporate confidence as a result of mounting economic uncertainty. The airline warned that softening demand was a direct reflection of broader economic anxieties, fueling further speculation that a downturn may be imminent.
The turmoil extended beyond the US and Asia, with European markets also taking a hit. The Stoxx Europe 600, a key benchmark for the region, closed 1.3% lower on Monday, signaling that investor apprehension over the global economic outlook is far from confined to the United States and Asia.
As markets continue to reel from the confluence of economic concerns and escalating trade conflicts, investors are bracing for further volatility in the coming weeks. The uncertainty surrounding US economic policy, coupled with the specter of a recession, has cast a long shadow over global markets, leaving financial analysts and business leaders anxiously watching for any signs of stabilization.
