- S&P 500 futures plunge 2.9% pre-market
- Japan's Nikkei sinks 3.4% as yen strengthens sharply
- Chinese exporters face 64% total tariff burden
Financial markets reeled Thursday as President Trump's sweeping tariff increases triggered the worst Asian trading session since 2022. U.S. equity futures pointed to continued volatility, with S&P 500 contracts down nearly 3% following overnight declines. Analysts warn the measures could erase $1.2 trillion from global GDP by Q4 2024 if maintained.
Japan's export-driven economy absorbed heavy blows, with the Nikkei briefly falling 4% before closing 3.4% lower. Major financial institutions Mitsubishi UFJ and Mizuho Financial collapsed over 8% as traders priced in delayed rate hikes. The yen surged to 147.04 against the dollar, complicating monetary policy decisions for the Bank of Japan.
Regional supply chain disruptions emerged as a critical concern. Thailand faces $7.8 billion in lost exports - equivalent to 2.3% of annual trade - under new 36% U.S. tariffs. This could force 150,000 Thai auto workers into unemployment by year-end,warned CGS International analyst Kasem Prunratanamala. South Korea's Kospi declined 1.1% despite semiconductor sector gains.
Three critical industry shifts are emerging:
- Accelerated manufacturing relocation from China to Vietnam/Mexico
- Central banks delaying rate cuts to manage currency volatility
- Commodity markets pricing in 18-month trade contraction
Currency markets reflected flight-to-safety trends, with the euro climbing 0.9% to $1.0949. Treasury yields swung wildly before settling at 4.18%, suggesting investors remain divided on recession timing. Brent crude fell 2.4% to $73.12/barrel as traders bet on reduced global energy demand.
Beijing signaled forthcoming stimulus measures to offset $34 billion in new tariffs, though economists question China's capacity to absorb 64% import taxes long-term. This fundamentally reshapes globalization's architecture,said IG strategist Yeap Junrong. We're witnessing the fastest reconfiguration of trade alliances since NAFTA.