HONG KONG: Tokyo led another plunge across Asian markets on Monday (Mar 31) while gold hit a record high as investors steel themselves for a wave of US tariffs this week that has fuelled recession fears.
Equities across the planet have been hammered in recent weeks ahead of Donald Trump’s “Liberation Day” on Wednesday, when his administration will unveil a series of levies against friend and foe alike, citing what he says are unfair trading practices.
His announcement last week that he would also impose 25 per cent duties on imports of all vehicles and parts ramped up the fear factor on trading floors, hammering car giants including Japan’s Toyota, the world’s biggest.
Governments around the world have pushed back against Trump’s tariffs, and could announce more countermeasures, while Canadian Prime Minister Mark Carney told Trump on Friday that he will implement retaliatory tariffs to protect his country’s workers and economy.
Adding to the dour mood was data showing the Federal Reserve’s preferred gauge of inflation rose more than expected last month over worries Trump’s tariffs will fan price rises and further dent hopes for interest rate cuts.
Markets fell across the board on Monday, with firms in all sectors feeling the pain.
Japan’s Nikkei 225 index plunged more than 4 per cent, extending last week’s slide, as automakers Toyota, Nissan and Mazda shed between 3 and 4 per cent, while tech investment titan SoftBank tanked more than 5 per cent.
The index’s drop put it in a correction, having fallen more than 10 per cent from its peak in December.
Zensho Holdings, which owns several Japanese restaurant franchises, plunged 3.9 percent after its beef bowl chain Sukiya said it would temporarily shut nearly all of its roughly 2,000 branches after a rat was found in a miso soup and a bug in another meal.
Seoul was also sharply lower.
“Within the Asia-Pacific region, the car levies will hit Japan and South Korea the hardest. About 6 per cent of Japan’s total exports are cars shipped to the US. In South Korea’s case, it’s 4 per cent,” Moody’s Analytics economists wrote.
“Such a sizeable tariff hike will undermine confidence, hit production and reduce orders. Given the long and complex supply chains in car manufacturing, the impact will ripple through these countries’ economies.
“Back-of-the-envelope calculations suggest the action could shave 0.2 to 0.5 percentage points from growth in each.”
