The MSCI Asia Pacific Index tumbled as much as 7.9%, the most since October 2008 on an intraday basis, after Trump struck a defiant tone on his tariff policy.
The US president told reporters yesterday evening to “forget markets for a second”.
“I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Trump said.
Across many Asian markets, turmoil ensued.
After being closed Friday for a holiday, a key gauge of Chinese stocks in Hong Kong dropped more than 9%.
The yen surged as investors fled to safer havens and Brent oil tumbled more than 4%. Nasdaq futures slumped more than 4%.
“I’ve refreshed my terminal more times than I’ve blinked today,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.
“Markets are grappling with a classic growth scare, and risk appetite is likely to remain subdued,” Chanana said.
Investor worries peaked as Trump’s remarks made clear that, unlike in previous financial meltdowns, the US government isn’t running to their rescue and China said Friday it would slap counter tariffs on the US.
As the tumult continued, some close to Trump urged him to rethink his plans ahead of an April 9th deadline for reciprocal tariffs to take effect.
“I strongly believe launching tariffs on April 9th against the entire world – massively in excess of what we are being charged – is a mistake,” billionaire Bill Ackman, the founder of hedge fund Pershing Square and a key Trump supporter, wrote in a post on X.
Ackman said Trump isn’t “infallible” and called for a 90-day reprieve on the tariffs.
“This is not what we voted for,” he said in a separate post.
With hope for a Washington-led reprieve fading, markets and officials watched for a reaction in Beijing, with speculation rising that China could aggressively devalue the yuan after President Xi Jinping’s government unveiled retaliatory 34% tariffs on US goods last week.
“This is the most volatile market I’ve ever experienced since the Covid outbreak and we’re just at the start of Trump’s term,” said Ken Cheung, the chief Asia currency strategist at Mizuho Bank Ltd in Hong Kong.
He said he was fielding calls about China’s reaction but said “it’s impossible to give an accurate answer right now given how things are swiftly moving”.
While Chinese officials have prioritised a stable currency, analysts are betting the US moves will force them to reconsider.
A weaker yuan would make Chinese goods cheaper abroad, offsetting some of Trump’s tariff impact, and make it costlier for local consumers to buy US goods.
A devaluation would come with a cost, though, including the risk of capital flight.
The offshore yuan fell 0.3%.
China’s policymakers discussed measures over the weekend to stabilise the economy and the markets, including whether to accelerate plans to unleash stimulus to bolster consumption, according to people familiar with the matter.
Beyond China, the broad selloff fueled already-heightened fears of a global recession and raised expectations that the Fed would try to respond, even if the possibility of stagflation sparked by tariffs would make it complicated to do so.
Investors were piling into US Treasuries, sending the two-year yield to 3.43%, the lowest since 2022.
Benchmark 10-year yields – a metric frequently cited by Trump administration officials – fell as much as 13 basis points in Asia today to 3.87%.
It all helped prompt TD Securities to join Goldman Sachs Group Inc and UBS Global Wealth Management in pulling forward their Fed easing expectations, going so far as to say the 10-year Treasury yield could drop to 3% this year.
“We assign 50% odds to a recessionary outcome for the US economy,” TD strategists including Oscar Munoz wrote in an April 6 note.
“They added that they were bringing forward their expectations for a Fed rate cut to June from July, and now project the Committee will ease rates at each meeting through May 2026,” Munoz said.
Speaking yesterday, treasury secretary Scott Bessent said there is “no reason” to price in a recession.
Bessent dismissed the market carnage as short-term reactions by “organic animals”.
“We get these short-term market reactions from time to time. The market consistently underestimates Donald Trump,” Bessent said.
Reopening after a holiday, Taiwan’s stock index tumbled as much as 9.8%, the most on record and putting it on track for a bear market.
Japan stock futures were briefly suspended as the circuit breaker was triggered, while Nintendo Co and Sony Group Corp shares fell by more than 10%.
South Korea also briefly halted sell orders for programme trading, while the country’s 5-year sovereign CDS widened the most since the start of the pandemic.
Beyond oil’s decline, commodities markets showed some unusual volatility.
Copper initially sank 7.7% in London before recovering to trade 3.6% higher.
Silver also pivoted from a deep, initial loss to then trade back in the green.
Southeast Asian
In Southeast Asia, where countries have spent years bolstering trade ties with the US as companies moved supply chains out of China, there was a sober realisation that more was needed.
The leaders of Vietnam and Malaysia held a phone call to discuss how to respond to the US tariffs, with Malaysian Prime Minister Anwar Ibrahim saying the region needed a united front.
Countries in the Association of Southeast Asian Nations – a collective grouping of ten countries – are among those hardest hit by US tariffs.
“We must acknowledge that this round of sweeping tariffs may just be the beginning of greater challenges to come,” Anwar said.
However, he offered few details on what measures they could pursue.
In the heart of Singapore’s central business district, currency trader Mingze Wu at financial services firm StoneX said he was watching trades getting squeezed and liquidity evaporating.
‘Really Scared’
“Investors are trying to read the tea leaves on Trump and all the retaliation risks but they’re just impossible to read,” he said.
“People are really scared of what’s going on,” Wu said.
The stock market moves suggested analysts had yet to factor in an extended global trade war into their forecasts for corporate earnings.
Some strategists are now contemplating bear market scenarios and making comparisons going as far back as the 1987 crash remembered as “Black Monday”.
If any of that is prompting the Trump team to reconsider this week’s tariff deadline, however, they weren’t signaling it.
“The tariffs are coming,” commerce secretary Howard Lutnick said yesterday on CBS’s Face the Nation, adding that Trump “announced it and he wasn’t kidding”.