Asian Markets Slip as Japanese Stocks Lead Declines Amid U.S. Tariff Concerns

Asian stock markets saw widespread declines, led by Japanese stocks, after U.S. President Donald Trump reaffirmed that tariffs on Mexico and Canada would be implemented as planned.

The Nikkei 225 fell 1.20%, closing at 37,331.18, while the Topix index dropped 0.71% to 2,710.18. Japan’s employment rate for January came in at 2.5%, slightly higher than the Reuters forecast of 2.4%.

South Korean and Hong Kong Markets Decline

South Korea’s Kospi index ended 0.15% lower at 2,528.92, while the small-cap Kosdaq slipped 0.81% to 737.90. January retail sales in South Korea declined by 0.6% from the previous month, following a revised 0.2% increase in December.

Hong Kong’s Hang Seng index fell 0.16% in its final trading hour. Investors kept a close eye on Chinese markets as the mainland began its annual parliamentary gathering, known as the “Two Sessions.” The CSI 300 index in China ended the day flat at 3,885.22.

Australian and Indian Markets Follow Suit

Australia’s S&P/ASX 200 lost 0.58%, closing at 8,198.10. January retail sales in Australia rose 0.3%, in line with Reuters’ estimates, after declining 0.1% in December.

Indian markets also reflected the bearish sentiment, with the Nifty 50 down 0.28% and the BSE Sensex losing 0.27% by 1:15 p.m. local time.

U.S. Markets Experience Steep Declines

U.S. stock markets suffered sharp losses as Trump reiterated the 25% tariffs on Mexican and Canadian imports.

The S&P 500 fell 1.76% to 5,849.72, marking its worst session since December.
The Dow Jones Industrial Average declined 649.67 points, or 1.48%, to 43,191.24.
The Nasdaq Composite dropped 2.64% to 18,350.19, led by an 8% decline in Nvidia shares.

Japan’s Market Leaders and Laggards

In Tokyo, the Nikkei 225 dropped 1.34%, with losses in the Fishery, Transportation Equipment, and Chemical sectors driving declines.

Top Performers:

IHI Corp. surged 11.66% to 10,505.00, hitting a five-year high.
Mitsubishi Heavy Industries gained 7.76%, closing at 2,285.50.
Dainippon Screen Mfg. rose 4.69% to 11,160.00.

Worst Performers:

Furukawa Electric tumbled 8.78% to 5,680.00.
Seven & i Holdings fell 6.88% to 2,044.00.
Fujikura Ltd. dropped 6.35% to 5,808.00.

Declining stocks outnumbered advancing ones on the Tokyo Stock Exchange by 2,446 to 1,163, with 251 stocks unchanged. Meanwhile, the Nikkei Volatility index surged 19.15% to 27.32, marking a three-month high.

Commodities and Forex Reactions

Crude oil for April delivery fell 0.53% to $68.01 per barrel, while Brent oil for May dropped 0.75% to $71.08 per barrel. April Gold Futures slipped 0.13% to $2,897.40 per troy ounce.

In forex markets, USD/JPY remained unchanged at 149.50, while EUR/JPY dipped 0.04% to 156.78. The U.S. Dollar Index Futures declined 0.16% to 106.50.

Tariff Concerns Weigh on Global Markets

On March 3, U.S. equity markets extended losses following Trump’s tariff confirmation.

The Nasdaq Composite dropped 2.64%, while the Dow and S&P 500 lost 1.48% and 1.76%, respectively. Bond markets also reflected concerns, with 10-year U.S. Treasury yields falling below 4.15%.

Trump signed an executive order increasing tariffs on Chinese goods to 20%, effective March 4, while reaffirming the 25% tariffs on Mexican and Canadian goods. He stated:

“No room left for Mexico or for Canada. No. The tariffs you know, they’re all set. They go into effect tomorrow.”

Economists cautioned that the tariffs could drive import costs higher, fueling inflation and delaying potential Federal Reserve rate cuts.

Global Trade War Risks Intensify

On March 4, Canada announced retaliatory tariffs against U.S. imports if the new tariffs proceeded. Market strategist David Scutt commented:

“Canada will start with 25% tariffs on U.S. imports worth C$30 billion from Tuesday. Additional tariffs on C$125 billion worth of U.S. imports will follow in 21 days. These tariffs will remain in place until the U.S. trade action is withdrawn.”

Trump also warned China and Japan against currency devaluation, suggesting further tariffs could be imposed as a countermeasure.

Asia-Pacific Markets React

The Hang Seng Index fell 0.50% on Tuesday morning, impacted by concerns over increased tariffs on Chinese, Canadian, and Mexican goods.

The Hang Seng Mainland Properties and Technology indices lost 1.17% and 0.20%, respectively. Alibaba and Tencent declined by 1.92% and 4.25%.

China’s CSI 300 and Shanghai Composite Index posted modest losses, declining 0.25% and 0.01%, respectively. However, expectations of stimulus measures from Beijing limited further downside risks.

Japan and Australia See Market Pullbacks

Japan’s Nikkei 225 declined 1.82% on Tuesday morning, as Trump’s currency devaluation warnings and potential auto, pharmaceutical, and semiconductor tariffs weighed on sentiment. Softbank Group fell 5.16%, while Nissan Motor Corp. lost 2.07%.

Australia’s ASX 200 erased Monday’s gains, dropping 0.64%, as mining, oil, and tech stocks suffered. Fortescue Ltd. fell 3.68%, while BHP Group lost 0.35%. The ASX All Technology Index declined 1.05% following Nasdaq’s overnight slump.