Asia report: Markets fall ahead of Trump tariff deadline
By Josh White
Date: Monday 31 Mar 2025
(Sharecast News) - Markets across the Asia-Pacific region fell sharply on Monday, led by Japan's Nikkei 225, which entered correction territory amid growing fears of a new wave of US tariffs set to be implemented later this week by president Donald Trump.
Patrick Munnelly, market strategy partner at TickMill, said global stocks extended their decline for a fourth consecutive day as Trump prepared to unveil new tariffs, intensifying fears of a global trade conflict and its potential economic fallout.
"Markets tumbled across the Asia-Pacific region, with the Nikkei 225 sinking to its lowest level in more than six months," he noted.
"Meanwhile, futures for US and European equities also slid.
"In contrast, gold prices surged to a record high, and US Treasury yields dropped as investors sought refuge in safe-haven assets."
Munnelly said that amid the heightened uncertainty, investment managers worldwide were scaling back risk exposure in their portfolios or refraining from making significant investments.
"Many remain cautious ahead of the anticipated announcement of reciprocal tariffs and their broader economic implications.
"Economists at Goldman Sachs have adjusted their forecasts, now predicting that both the Federal Reserve and the European Central Bank will implement three interest rate cuts this year in response to the adverse effects of trade restrictions on global economic growth.
"Tariff announcements from president Trump are poised to dominate markets."
Patrick Munnelly questioned whether the measures were strategic bargaining tools, or if they signalled a "lasting shift" aimed at addressing perceived imbalances in the global economic system.
"This question may linger unanswered for some time.
"Meanwhile, euro area inflation is anticipated to return to 2% in March, and the US jobs report is expected to show another month of robust employment growth."
Markets fall across the Asia-Pacific region
Japan's Nikkei 225 plunged 4.05% to 35,617.56, marking its lowest close in over six months and confirming a correction, typically defined as a decline of 10% or more from a recent peak.
The broader Topix index fell 3.57% to 2,658.73.
Technology and insurance stocks were among the hardest hit, with Renesas Electronics sliding 11.21%, Sumco Corporation down 8.7%, and MS&AD Insurance Group losing 8.21%.
Losses were more moderate in Chinese markets - the Shanghai Composite declined 0.46% to 3,335.75, while the Shenzhen Component shed 0.97% to close at 10,504.33.
Several stocks, including Shandong Binzhou Bohai Piston and Routon Electronic, fell by the daily 10% limit.
Hong Kong's Hang Seng Index dropped 1.31% to 23,119.58, as consumer and property shares retreated.
Sportswear maker Li Ning sank 7.23%, Longfor Properties declined 5.13%, and Sands China lost 4.53%.
South Korea's Kospi 100 slumped 3.2% to 2,504.53, weighed down by weakness in semiconductor and materials sectors.
Hanmi Semiconductor plunged 10.85%, EcoPro Materials fell 9.83%, and Cosmo Advanced Materials dropped 7.77%.
In Australia, the S&P/ASX 200 slid 1.74% to 7,843.40, dragged lower by declines in lithium and iron ore stocks.
Pilbara Minerals and Zip Co each lost over 8%, while Champion Iron dropped 6.72%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 was more resilient, slipping just 0.14% to 12,270.00.
Losses were led by property and logistics stocks, with Stride Property, Synlait Milk, and Mainfreight each down more than 2%.
Currency markets reflected a move to safety, with the dollar last down 0.35% on the yen to trade at JPY 149.32, while it strengthened 0.61% against the Aussie to AUD 1.6004, and advanced 0.58% on the Kiwi, changing hands at NZD 1.7595.
Oil prices rose slightly, with Brent crude futures last up 0.67% on ICE to $74.12 per barrel, and the NYMEX quote for West Texas Intermediate gaining 0.27% to $69.55.
Data shows positive momentum in China, weaker output in Japan
Fresh economic data released Monday showed signs of strengthening momentum in China and South Korea, while Japan's results were more mixed.
China's manufacturing activity expanded at its fastest pace in a year, with the official purchasing managers' index (PMI) rising to 50.5 in March.
The reading, matching analyst expectations, marked a return to expansionary territory and suggested that recent stimulus measures were beginning to support industrial activity.
However, the outlook remained clouded by the prospect of new US tariffs, which could weigh on future growth.
Japan's factory output meanwhile rebounded in February, rising 2.5% from the previous month and exceeding forecasts.
The increase was driven by gains in production machinery and electronic components, reversing a January decline.
However, retail sales growth slowed to 1.4% year-on-year in February, missing expectations and falling well below January's 4.4% increase, indicating weaker consumer demand.
South Korea posted stronger-than-expected economic indicators for February.
Industrial production surged 7% from a year earlier, beating the 2% forecast and reversing a steep decline in January.
On a monthly basis, output rose 1%, marking a second consecutive month of growth.
Meanwhile, retail sales climbed 1.5% from the prior month, their strongest increase since August 2024, suggesting a rebound in domestic consumption.
Reporting by Josh White for Sharecast.com.
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