Hobnob News – April 7, 2025
Asian equities suffered a devastating blow on Monday, with investors fleeing en masse following China’s retaliatory tariffs against the United States, heightening fears of a full-blown global recession.
The sweeping selloff saw Hong Kong’s Hang Seng Index crash by over 10%, while Tokyo’s Nikkei 225 dipped more than 8% intraday before closing 6.2% lower. Taipei tumbled more than 9%, marking the worst day for equities since the pandemic-era downturn.
Oil and commodity markets also witnessed a significant slide, with crude oil dropping over 3% as concerns over global demand took hold. Futures markets on Wall Street projected further losses after a brutal close the previous Friday.
The turmoil was sparked by former U.S. President Donald Trump’s aggressive trade policy, which included sweeping tariffs on key trading partners. He argued the move was necessary to correct longstanding trade imbalances, asserting that several nations were “lining up” to negotiate fairer terms with Washington.
However, China’s response was swift and firm. Following the close of Asian markets on Friday, Beijing announced a retaliatory tariff of 34% on all U.S. imports effective April 10. It also implemented export restrictions on seven critical rare earth elements, including gadolinium and yttrium — vital to industries such as medical imaging and electronics.
Despite growing economic fallout, Trump doubled down on his stance over the weekend, stating he would not negotiate unless the U.S. trade deficit was resolved. He rejected suggestions that he was deliberately inducing market panic, likening his measures to “taking medicine to fix something.”
No Sector Spared
Every sector across Asia felt the weight of the sell-off. Technology, automotive, financials, gaming, and energy stocks all plummeted. Chinese giants Alibaba and JD.com fell by 14% and 13%, respectively. Japan’s SoftBank lost over 10%, while Sony dropped nearly 10%.
Markets in Shanghai, Singapore, and Seoul dropped between five and eight percent. Seoul triggered a temporary trading halt, or “sidecar” mechanism, for the first time in eight months.
Other regional markets — including Sydney, Wellington, Manila, and Mumbai — were also deeply in the red.
Steve Cochrane, Chief Asia-Pacific Economist at Moody’s Analytics, warned: “A U.S. recession could occur very quickly and be prolonged. China, heavily reliant on exports, will inevitably feel the brunt as well.”
Oil prices reflected the global demand concerns, plunging further after a 7% drop on Friday. Brent crude settled at $63.84 per barrel, while West Texas Intermediate hit $60.31 — both at their lowest since 2021. Industrial metal copper also continued its downward trajectory.
Stephen Innes of SPI Asset Management remarked, “Markets are in free-fall. Trump’s administration views tariffs as a political win rather than a negotiation tactic.”
Wall Street Woes and Fed Dilemma
Wall Street closed Friday with all major indices down nearly 6%. Federal Reserve Chairman Jerome Powell warned that tariffs would likely spur inflation while slowing economic growth, increasing the risk of rising unemployment.
The Fed now faces the delicate task of balancing rate cuts to support growth against inflation control. “Powell’s hands are tied,” said Innes. “He’s acknowledged that tariffs are both inflationary and recessionary, yet cannot intervene freely.”
Tim Waterer, Chief Market Analyst at KCM Trade, echoed investor sentiment: “Markets are gripped by fear as the world’s two largest economies exchange blows. This prolonged tariff battle risks dealing a knockout blow to both.”
Market Snapshot (as of 04:00 GMT):
Tokyo (Nikkei 225): -6.2% at 31,699.95
Hong Kong (Hang Seng): -10.7% at 20,405.96
Shanghai Composite: -6.3% at 3,130.17
Brent Crude: -2.7% at $63.84
WTI Crude: -2.7% at $60.31
Dow Jones (NY): -5.5% at 38,314.86
FTSE 100 (London): -5.0% at 8,054.98
Dollar/Yen: 146.33 (down from 146.98)
Euro/Dollar: $1.0950
Pound/Dollar: $1.2889
