A significant decline in the stock markets of Asia and Europe was witnessed on Monday. This decline was a result of President Trump’s decision to impose tariffs on Canada, Mexico and China.
In the United States, stock futures indicated a lower opening. Nikkei 225 of Japan and South Korea’s Kospi declined by over 2.5%. Taiwan Stock Exchange weighted index saw a sharp decline of 3.5%.
Meanwhile, markets in mainland China were closed for the Lunar New Year celebration. Stocks in Hong Kong where a lot of Chinese firms are listed experienced a slight dip.
Not only the Asian market but European stock indices also faced a steep decline. The Euro Stoxx 50 which consists of the largest companies in the region also encountered a decline of 2%.
The FTSE 100 in the UK dropped by 1.3%, and in the U.S., S&P 500 futures fell by 1.5%. Investors have started to evaluate the potential consequences of what may grow into a disruptive global trade war, major exporting nations in Asia and Europe are expected to bear the impact of the decision.
These companies have also made substantial investments in North America under trade agreements which are designed to facilitate commerce. According to Jim Reid, a strategist at Deutsche Bank, the imposition of tariffs came as a shocker for the investors. He, in his report, noted, “the market has failed to take this threat seriously, significantly underestimating the associated risks.”
Auto manufacturers who invested heavily in the supply chains across Canada and Mexico were among the most notable declines in share prices on Monday. It could be adversely affected by the new tariffs. Shares of Toyota Motor and Nissan Motor of Japan fell approximately 5%, while Honda Motor dropped by 7%. Shares of Volkswagen, Stellantis and Daimler also saw a decline.
Business Journalist
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