Global Markets See Mega Tariff Shock, Trump Says Medicine Working

Asian stock markets opened in a bloodbath on Monday as US futures pointed to significant losses on Wall Street over US President Donald Trump's punishing tariffs, even as countries sought compromise with the defiant president. The carnage came as the American President defended his tariffs, saying a lot of countries are 'dying to make a deal' and any adjustment in the stock market would be temporary.

On Sunday, Trump denied that he was intentionally engineering a selloff and insisted he could not foresee market reactions, saying he would not make a deal with other countries unless trade deficits were solved. Speaking about the falling markets, he said the "medicine" can be necessary at times.

"Sometimes you have to take medicine to fix something," he said of the market pain that has seen trillions of dollars wiped off the value of US companies since the beginning of his tariff rampage.

Speaking to reporters aboard Air Force One, he added that he had engaged with world leaders on the issue to seek resolution over the weekend, claiming "they're dying to make a deal."

Market Bloodbath Continues

In early trade on Monday, Japan's Nikkei index plunged more than 7 per cent, as the fallout from Trump's bombshell announcement last week continued to unnerve investors. In early trade in Tokyo, the Nikkei 225 was off 7.35 percent and the broader Topix was down almost eight percent, adding to a 2.75-percent drop on Friday, while in Seoul, the Kospi was off 4.8 percent.

Stocks in Hong Kong also plunged more than nine percent. The Hang Seng Index dropped 9.28 percent, or 2,119.76 points, to 20,730.05, while in mainland China the Shanghai Composite Index shed 4.21 percent, or 140.84 points, to 3,201.17. 

Shares in Singapore also plunged more than seven percent at the open on Monday. The Straits Times Index sank 7.37 percent, or 281.84 points, to 3,544.02 as markets across Asia went into freefall.

Australian blue-chip stocks, a benchmark index of the country's largest 200 listed companies, also sank 6 per cent after trading opened on Monday minutes after opening. A circuit breaker was triggered on the Taiwan stock exchange as stocks plunged 9.8 per cent at the open.

Indian benchmark indices are also likely to open sharply lower on Monday.

This came as the US market showed no signs of revival, with futures contracts for the New York Stock Exchange's main boards sharply down Sunday, suggesting more pain for battered Wall Street stocks when markets open Monday. Benchmark S&P 500 futures slid 4.31 per cent in volatile trade, while Nasdaq futures dived 5.45 per cent, adding to last week's losses.

Almost $6 trillion has been wiped off the value of global stock markets following President Trump's tariff offensive last Wednesday. Futures markets pulled Treasury yields down sharply, hampering the dollar. Gripped by anger, anxiety, frustration, and fear, investors wagered on the mounting risk of recession, which could see US interest rates cut as early as May.

The gloomier outlook for global growth kept oil prices under heavy pressure, following steep losses last week. Brent fell $2.12 to $63.46 a barrel, while U.S. crude dived $2.05 to $59.94 per barrel.

The flight to safe havens saw Treasury futures surge a full point, a very rare move for Asian trade, while Fed fund futures jumped to price in an extra quarter-point rate cut from the Federal Reserve this year.

Markets swung to imply around a 63 per cent chance the Fed could cut as soon as May, even though Chair Jerome Powell on Friday said the central bank was in no hurry on rates, according to the Reuters report.

Yields on 10-year Treasuries dropped 10 basis points to 3.897 per cent amid the general flight from risk assets. That dovish turn saw the dollar slip another 0.9 per cent on the safe-haven Japanese yen to 145.59 yen, while the euro held firm at $1.0955. The dollar shed 1.2 per cent on the Swiss franc to 0.8501, while the trade-exposed Australian dollar dropped a further 0.7 per cent.

Even gold was swept up in the selloff, easing 0.7 per cent to $3,013 an ounce. 

Trump Administration Refuses To Back Down

Meanwhile, the Trump administration showed no sign of backing away from its sweeping tariff plans, and China declared the markets had spoken on their retaliation through levies on US goods.

Investors had thought the loss of trillions of dollars in wealth and the likely body blow to the economy would make Trump reconsider his plans.

"The size and disruptive impact of U.S. trade policies, if sustained, would be sufficient to tip a still healthy US and global expansion into recession," said Bruce Kasman, head of economics at JPMorgan, putting the risk of a downturn at 60 per cent.

"We continue to expect a first Fed easing in June," he added. "However, we now think the Committee cuts at every meeting through January, bringing the top of the funds rate target range down to 3.0 per cent."

Investors were also wagering that the imminent threat of recession would outweigh the likely upward shove to inflation from tariffs.

US consumer price figures out later this week are expected to show another rise of 0.3 per cent for March, but analysts assume it is just a matter of time before tariffs push prices sharply higher, for everything from food to cars.

Rising costs will also put pressure on company profit margins, just as the earnings season gets underway with some of the big banks due on Friday. Around 87 per cent of US companies will report between April 11 and May 9.

"We expect during upcoming quarterly earnings calls fewer companies than usual will provide forward guidance for both 2Q and full-year 2025," analysts at Goldman Sachs said in a note.

"Rising tariff rates will force many companies to either raise prices or accept lower profit margins," they warned. "We expect negative revisions to consensus profit margin estimates in coming quarters."

"Black Monday" Fears

Sounding alarm bells after US President Donald Trump's Liberation Day global tariff plans crushed global stocks for two consecutive days, CNBC host Jim Cramer predicted global markets could witness a blood bath that could expand into a crash similar to 1987's "Black Monday."

Cramer said no matter what the numbers reveal, the direction of the market will depend on President Trump's next move.

Black Monday was a global and largely unexpected stock market crash on Monday, October 19, 1987. Worldwide losses were estimated at US$1.71 trillion. The stock market's disastrous one-day tumble created a domino effect that caused the disaster to continue globally.

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