Nikkei 225 and ASX 200: Tariff Fallout Deepens as Yen Rises, Oil Crashes

US Markets Plunge on President Trump’s Tariff Shock

US equity markets tumbled on Thursday, April 3, after President Trump’s tariff announcements rattled investor sentiment. The Nasdaq Composite Index dropped 5.97%, while the Dow and the S&P 500 fell 3.98% and 4.84%, respectively.

More severe than expected, the tariffs fueled recession fears and triggered a flight to safety. The new tariff hikes were as follows:

• China: 34%, raising total US tariffs to 64%.
• Taiwan: 32%.
• South Korea: 30%.
• Japan: 24%.
• EU: 20%
• A minimum 10% baseline tariff.

Nick Timiraos, Chief Economic Correspondent for The Wall Street Journal, summarized the market reaction:

“Top economic advisers to Trump (Bessent in his confirmation hearing, Miran in his Nov 2024 paper) have said that tariffs need not raise consumer prices so long as the dollar appreciates, as it did in 2018-19. The dollar has gone the other way.”

Apple Inc. (AAPL) led the declines, plunging 9.25%. CN Wire noted the widespread impact:

“The tariffs hit Apple’s major manufacturing hubs in China, Taiwan, India, and Vietnam, potentially affecting nearly every product Apple sells, from iPhones to accessories. […] Analysts estimate that a 10% tariff could reduce Apple’s net income by 3.5-4%, with a 9% impact on its gross margin if tariffs on China remain. Apple’s dependence on China for over 90% of its manufacturing makes it particularly vulnerable.”

Asian Market Implications: Markets in Asia opened with a second day of steep losses on April 4 following Thursday’s US market sell-off. The US futures pointed to another pullback on Friday, April 4, influencing sentiment in the Asian session.

Hong Kong and Mainland China Markets Closed

There was no trading on the Hang Seng Index or the Mainland China markets due to the Ching Ming Festival. Market reactions may surface when trading resumes on Monday, April 7.

Fitch Ratings downgraded China from A+ to A; Outlook Stable, with forecast GDP growth of 4.4% in 2025, down from 5.0% in 2024. Meanwhile, the USD/CNY remained flat, drawing investor attention amid tariff tensions.

Jeroen Blokland, founder of Blokland Smart Multi-Asset Fund, stated:

“The key thing to watch now is the Chinese Yuan. China is now facing accumulated tariffs of 54%. If China decides to retaliate by sharply weakening the Yuan, this correction will get significantly deeper. Equities went down heavily after China’s 2015 devaluation.”

While investors monitor China’s potential response, additional fiscal or monetary stimulus targeting domestic demand and consumption may support Hong Kong and Mainland stocks.

Nikkei 225 Stumbles on Yen Strength and Tariff Pressure

The Nikkei 225 extended its losses from April 3, sliding 2.64% on Friday morning. A combination of punitive tariffs on Japanese goods and the USD/JPY‘s slump to 145 impacted demand for Nikkei 225-listed stocks. A stronger Yen and increased trade barriers could weigh on exporter competitiveness and earnings.

Notable losses included:

• Nissan Motor Corp. (7201) slid 3.51%, while Honda Motor Co. (7267) was down 5.45%.
• Softbank Group (9988) plunged 6.58%, with Tokyo Electron (8035) falling 3.65%.
• Sony Corp. (6758) posted a 5.10% morning loss, reflecting sentiment toward Trump’s tariffs and potential impact on demand.

ASX 200 Slides Amid Global Market Turmoil

Australia’s ASX 200 dropped 1.94% on Friday morning, tracking Wall Street’s decline. Oil and tech-related stocks suffered the heaviest losses as recession fears grew. Meanwhile, gold stocks advanced for a second consecutive session.

• The S&P/ASX All Tech Index slid 4%, mirroring the Nasdaq’s losses.
• Woodside Energy Group Ltd. (WDS) plunged 8.79% as crude prices slid post-tariffs.
• Northern Star Resources gained 2.38%, defying falling gold prices.

Outlook: Markets Brace for Escalation

Tariff tensions will dominate short-term market sentiment. Potential retaliation from trade partners may further destabilize global equities. Analysts are closely watching China’s next move, including potential stimulus aimed at domestic demand.

Investors should also monitor central bank signals. Trump’s tariff shock may alter market expectations for the Fed’s policy path.

For trading strategies tailored to the current environment, explore our in-depth analysis here on navigating volatile markets.