Trump's "tariff storm" severely impacts Asian stock markets! "Risk aversion" quickly sweeps across the globe.

The stock markets of the entire emerging markets in Asia were completely swept into a global stock market sell-off on Friday, as President Trump's latest tariff threats triggered a sharp drop in risk assets. The stock markets in Thailand and Indonesia even entered a so-called "bear market" directly after the plunge, with the Hang Seng Tech Index plummeting over 5%. In the global stock markets, especially with the recent continuous decline in the U.S. stock market, investment portfolios that lean towards defensive strategies have recently outperformed those that prefer high-risk assets such as technology stocks and cryptocurrencies, highlighting the "risk aversion" in the macro expectations of a new global trade war that could be triggered by Trump's tariffs, with funds tending to flow into safe-haven assets to strive for excess returns while avoiding risks. Statistics show that the Thai benchmark stock index plunged by 2.4%, with a cumulative decline exceeding 20% from its peak in October. The Indonesian stock market also fell over 20% entering a bear market, with the central bank pledging strong intervention in the market, as the Indonesian rupiah exchange rate recently hit its lowest point in five years. At the same time, global funds are pouring into essential consumer goods, healthcare sectors, as well as the U.S. dollar and U.S. bond markets in search of safe havens, aiming to avoid market downturn risks by creating defensive portfolios. "The Trump tariff threats have clearly become the market focus, and with the rebound of the U.S. dollar, investment sentiment in the entire Asia region is extremely fragile," said Kok Hoong Wong, Institutional Equity Sales Trading Head at Maybank Securities Pte. Asian stocks and currencies are facing a double blow: the uncertainty of Trump's trade policies and concerns over the Fed's cooling rate cut expectations. Trump's declaration of imposing tariffs on Canada, Mexico, and China, instead of negotiating trade talks as the market had previously expected to stop the tariff hikes, has cast a shadow over the global tariffs and weak global demand, severely impacting export-oriented economies like Thailand in Asia, as Indonesia, while receiving net bond inflows, now faces intensified capital outflows. The latest turmoil stems from Trump officially announcing new tariffs on China and planning to impose taxes on Mexico and Canada starting next week. The new tariffs on Chinese goods have escalated the trade war between the world's two largest economies and raised concerns about a new round of global trade wars, with economists warning that the U.S. tariffs on China, Mexico, and Canada could push them into economic recession. This is also the logic behind the financial markets' increased concerns about the U.S. economy entering a "recession" or "stagflation," as recent economic data and consumer inflation expectations indicate a resurgence of inflation, along with a significant decline in U.S. consumer confidence and service sector PMI that far exceeds market expectations. Trump's latest statement that imposing 25% tariffs on Canada and Mexico will take effect on March 4, while Chinese imports will face a further 10% tariff. Economists generally believe that tariffs could harm U.S. economic growth, exacerbate inflation, and possibly lead to economic recession in Mexico and Canada. China has vowed to take "all necessary measures" to counter the U.S. actions. In addition, as Trump failed to stop the tariffs on global trading giants as the market had expected, there are concerns in the market about so-called global "reciprocal tariffs," as well as the tariffs on steel, chips, and pharmaceutical products under the leadership of the U.S. government are also slated to be implemented according to previous plans. "Unfortunately, Trump's push for tariffs on China, Mexico, and Canada, and the possible expansion of tariff coverage, will significantly raise U.S. inflation pressure, leading to long-term high interest rates and causing the U.S. dollar to soar," said Xin-Yao Ng, fund manager at abrdn. "This puts pressure on vulnerable currency markets, including many ASEAN countries (especially Indonesia)." Statistics show that the Bloomberg Dollar Spot Index has risen by 0.7% this week, while the benchmark index measuring Asian currencies marked its worst week in over four months, highlighting the inflow of funds into U.S. assets driven by risk aversion. As the global trade tensions impact emerging markets, investors are massively withdrawing from emerging market stocks and turning to the U.S. dollar, U.S. bonds, and developed markets in the healthcare, essential consumer goods, and other defensive assets. Global funds continue to sell Thai stocks, making it the worst-performing stock market in Asia in 2025, with nearly $10 billion in outflows in two years. According to institutional statistics, foreign investors sold a net $934 million worth of Indonesian market stocks in February, marking the fifth consecutive month of capital outflows. The benchmark Kospi index in the South Korean stock market fell by over 3% on Friday, while India's NSE Nifty 50 index saw its largest decline in over two weeks. So far this year, emerging market stocks have dominated the worst-performing major stock indexes globally. "The prospects of tariffs have cast a shadow over Southeast Asian stock markets," said Nirgunan Tiruchelvam, analyst at Aletheia. "More importantly, the strong U.S. dollar amid the expectations of tariffs and trade wars, combined with regional economic difficulties, is impacting assets in the region." Trump's tariff measures have rocked global stock markets, while safe-haven assets rise The global stock market sell-off has spread from North America to Asia and then to Europe, with the continuous strengthening of the U.S. dollar and the continued decline in U.S. bond yields creating a frenzy of risk aversion in financial markets. Investors are avoiding high-risk assets such as tech stocks and cryptocurrencies, with even the recently performing Chinese and European stock markets unable to escape the sell-off under the atmosphere of risk aversion. During the Asian trading session on Friday, the Bloomberg Dollar Spot Index continued to rise, while U.S. Treasury prices also rose, continuing the strong short-term rally in U.S. Treasuries from the previous trading day. The yield on the 10-year U.S. Treasury fell to around 4.23%, meaning that the 10-year U.S. bond prices have surged in recent days under the influence of risk aversion, with this yield curve hitting a new low since December. In addition, traditional safe-haven sectors in the global stock market such as healthcare and essential consumer goods suffered smaller declines, with these safe-haven sectors even experiencing slight gains in developed markets such as the U.S. stock market. Trump's insistence on the policy of imposing tariffs on China, Canada, and Mexico has caused widespread turmoil in the global stock markets: the S&P 500 index has wiped out all its gains in 2025, Bitcoin has plummeted by 25% breaking historical highs, and European STOXX 50 futures The benchmark stock index of Asian stock markets fell by more than 1%, marking the largest drop in nearly a month.Technology stocks can be said to be the hardest hit area in this round of selling wave. The Nasdaq 100 index, focusing on the world's hottest technology stocks, plummeted by 2.8% on Thursday, while Nvidia's stock price plummeted by 8.5% after announcing its latest financial report. Since February, Chinese technology stocks such as Alibaba, Xiaomi, and Tencent have been leading the global stock market, and the Hang Seng Tech Index, which can be called the strongest index in February, also couldn't escape the selling wave on Friday, with a decline of more than 5%. It is worth noting that traditional safe-haven assets like gold have shown relatively weak performance recently. The main reason is that the price of gold has skyrocketed since 2024, reaching historical highs this year. Currently, the price is still hovering near its all-time high, causing safe-haven funds to resist chasing highs and instead flowing towards two other traditional safe-haven assets that have performed poorly since the beginning of this year - the US dollar and US bonds. Jun Rong Yeap, a market strategist at IG Asia Pte, stated that these recent statements "prompt market participants to reassess their expectations for the Trump administration's tariff policy." "Whether this is still a negotiating strategy under extreme pressure or a clear measure remains to be seen, but the market is not willing to take risks." Billy Leung, an investment strategist from Global X ETFs, said that the additional 10% tariffs on China are "disappointing, as it keeps economic growth uncertainty alive, and the stock market hates uncertainty and increases the risk of this practice becoming a pattern." "The market has been exhausted by tariff negotiations, and now investors are forced to reassess." -In the US stock market, "risk aversion" suddenly prevailed On Thursday, the US stock market, which is valued near historical highs, experienced a "Black Thursday": the S&P 500 plummeted by 1.6%, erasing all its gains for the year, and the Nasdaq 100 index plummeted by 2.8%. AI leader Nvidia's financial report fell short of expectations by 8.5%, triggering a sell-off in technology stocks. The benchmark index measuring the "seven tech giants" of the US stock market - which includes Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Meta Platforms - officially fell into a correction zone. Goldman Sachs' "no-profit tech stock portfolio" is on the verge of breaking, and is about to give up all investment gains brought by the speculative frenzy after the election. The "Trump premium" (enthusiastic surge brought by Trump's victory) of cryptocurrency concept stocks has completely evaporated, and an index measuring heavily shorted companies has fallen to levels seen in October. -The fundamental outlook for the US economy is also pessimistic. The latest economic data shows weak business activity, inflation expectations, consumer confidence, and jobless claims, with bond traders rushing to buy US Treasuries, betting that the Fed will have to shift from fighting inflation to dealing with an economic slowdown. Under the influence of animal spirits, "momentum trading" was completely reversed on Thursday, with the technology and communication services sectors that led the way in 2023-2024 becoming the worst-performing sectors in 2025. In addition, traditional defensive sectors such as healthcare and essential consumer goods rose overnight. Coca-Cola rose on Thursday amid declines in the three major US indices, and healthcare giants Johnson & Johnson, Novartis, AbbVie, and Bristol-Myers Squibb all rose on Thursday. JC O'Hara, chief technical strategist at Russell Capital, pointed out: "The bond market frenzy is being interpreted as an economic warning, accelerating the exodus of funds from risky assets. When investors see defensive rebounds, they will become more inclined to defense rather than offense." "The S&P 500 welcoming lower yields, but when the decline is so fast and so sharp, the first reaction of investors is to ask what's wrong with the market." he added. "As the market interprets the rise in the bond market and the healthcare sector as a defensive move, it also accelerates investors' withdrawal from high-risk chasing trends." Individual investors typically swarm into momentum-driven speculative trading, but now they are pausing their frenzied buying. According to data from JPMorgan, US retail investors sold $1.1 billion worth of stocks within the first two hours of trading on Monday, marking the largest outflow of funds within two hours since the outbreak of the pandemic in March 2020. According to the latest sentiment survey from the American Association of Individual Investors (AAII), overall, individual investors' sentiment has become extremely pessimistic. The data from the one-week survey ending on Wednesday shows that the percentage of US individual investors expecting stock prices to fall in the next six months surged by over 20 percentage points to nearly 61%, compared to a historical average bearish ratio of only 31%. The proportion of 41.2% biased towards bearish sentiment marks the highest point since September 2022 (43.1%), with even higher levels of pessimism seen in March 2009 at 51.4%.