Hang Seng Slumps as Trade War Stirs Recession Fear

Global financial markets continue to experience turbulence as fears over escalating U.S. tariffs sent stocks tumbling and investors risk appetite following suit. This market reaction follows recent trade actions by the United States, sparking concerns over a potential recession.

The stock market saw sharp declines, with Nasdaq 100 futures plummeting by 3.91%, High-profile companies also suffered substantial losses: Apple's market capitalisation decreased by over $240 billion as its shares fell by 7.29%, and Nvidia (NASDAQ: NVDA) saw its market value fall by 7.36%.

Looking to international markets, and the Hang Seng Index has fared worse than most, with a 13.22% decline to start this week erasing much of year-to-date gains. More than 3,000 points were wiped off the Hong Kong index on the day, to leave gains down at 1.04% on the year. This brings the index back to resistance seen back in May 2024.

President Donald Trump's recent tariff announcements have increased effective import taxes to levels not seen in a century. The new measures included a 10% baseline tariff that took effect over the weekend, with more considerable levies imposed on certain trade partners: China's tariffs reached 34%, Japan's 24%, Vietnam's 46%, South Korea's 25%, and the European Union’s 20%.

Olu Sonola from Fitch Ratings described these tariffs as a game-changer for the U.S. and the global economy, potentially dragging several countries into recession. Adding to the volatile environment, Deutsche Bank's George Saravelos highlighted China's significant role in global trade and its possible strategic responses in negotiations.

The ongoing trade conflict underscores the critical state of global economic relations, and the financial implications are expected to unfold over the coming months. As the situation evolves, markets worldwide remain on edge, with countermeasures from China already announced, and Europe's comments looming large.