(Bloomberg) — Asian equities declined at the open Thursday after President Donald Trump’s latest trade salvo scuppered demand for riskier investments.
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Indexes in Japan and Australia fell as did equity-index futures for US stocks in early Asian trading. Both the S&P 500 and Nasdaq 100 tumbled the most in two weeks on Wednesday. The dollar extended its gain while the Mexican Peso and the Canadian dollar slipped. Toyota Motor Corp. and Hyundai Motor Co. were among automakers slumping in Asia. Shares of Ford Motor Co. fell 4.7% in after-market hours trading while General Motors Co. dropped 6.1%.
The quickly shifting stance on US trade sanctions on the nation’s allies and foes alike adds to already heightened market concerns as investors race to assess the impact on global trade and economic growth. Market participants also remain unclear on how tariffs might impact inflation and economic growth, with most recent data hinting at softer economic momentum alongside still-elevated price pressures.
Trump’s move “rocked the confidence of markets once again,” wrote Kyle Rodda, a senior market analyst at Capital.com. The tariffs added “another impost on a significant industry and raising the question whether the Trump administration’s crusade against global trade will continue beyond so-called ‘Liberation Day.’”
Trump signed an order to slap a 25% tariff on all cars not made in the US that’s effective from April 2. However, reciprocal duties that are set to be announced next week will be “very lenient,” Trump said. China may also get a tariff reduction to secure a deal on the sale of ByteDance Ltd.’s social video platform TikTok to an American company, Trump added.
The critical uncertainty for markets is what the Trump administration is actually trying to achieve with its tariffs as the ‘it’s just a negotiating tool’ theory has “largely gone out the window,” Rodda wrote.
US equities dropped Wednesday with the S&P 500 down more than 1%, led by the group of megacaps known as “Magnificent Seven” — whose quarterly selloff is shaping up to be the worst since 2022. Nvidia Corp. and Tesla Inc. dropped at least 5.5%. The Nasdaq 100 slipped around 2%. A gauge of big banks snapped a streak of eight straight days of gains.
Worries over the economic effects of the global trade war are sapping liquidity in US stocks, creating a headache for institutional investors that may also boost volatility in broader markets. Liquidity in S&P 500 stock-index futures, as measured in the most-active contract, stands at a two-year low, data compiled by Deutsche Bank AG show.
