Introduction

Asian stock markets slumped on Monday as heightened trade tensions escalate ahead of U.S. President Donald Trump’s announcement of significant tariffs set for April 2. Reports indicated that Trump is contemplating broader tariffs, spooking investors and fueling steep declines across regional exchanges.

Additionally, Wall Street’s sharp decline last Friday, exacerbated by new inflation data, only added to the uncertainty faced by Asian markets, even as China showed robust economic data.

Market Reactions:

Japan and South Korea Lead Declines

• Nikkei 225: -3.9%
• KOSPI (South Korea): -2.6%
• TOPIX (Japan): -3.3%

What’s Driving the Sell-off?

• Auto and tech stocks declined amid fears of a 25% auto tariff.
• AI stocks took a hit, particularly following reports that Microsoft canceled multiple data center contracts.
• Japan’s industrial production showed strong growth; however, retail sales disappointed.

China Markets Drop Despite Strong Data

• Shanghai Composite: -0.7%
• CSI 300: -0.7%
• Hang Seng (Hong Kong): -1.5%

Why Are Chinese Stocks Falling?

• China’s PMI data exceeded forecasts, reflecting economic strength.
• Nonetheless, tariff uncertainties overshadowed that optimism.

Broader Asian Market Trends

• Australia’s ASX 200 declined by 1.6% ahead of the RBA’s interest rate decision.
• Southeast Asian markets were closed for a holiday.

Market sentiment remains cautious as investors brace for news from the RBA and Trump’s upcoming tariff decisions.

Looking Forward: Market Analysis and Key Events

• Tuesday will bring the Reserve Bank of Australia’s interest rate decision, which is expected to influence market sentiment significantly.
• Wednesday’s announcement of initial tariff levels will add more clarity.
• Auto tariffs expectations on Thursday might generate considerable market reactions.