Shares nosedived around the world Monday as US "Liberation Day" tariffs and a backlash from Beijing triggered massive sell-offs. Market observers expect investors will face more wild swings in the days and weeks to come, with a short-term resolution to the trade war appearing unlikely.

Americans may feel “some pain” because of tariffs, Trump has said, but he asserts the long-term goals, including getting manufacturing jobs back to the United States, are worth it.

US futures signaled further weakness ahead. The futures for the S&P 500 lost 4.8% while that for the Dow Jones Industrial Average shed 4.1%. The futures for the Nasdaq lost 5.3%.

Pre-market warnings vs market panic

This reflects the immediate pre-market sentiment in the US futures markets. These numbers indicate that investors are bracing for more losses when the markets open, showing concern about the long-term effects of the trade war and the possibility of retaliatory tariffs or escalation. The drop in futures signals a high level of caution and fear among investors regarding the broader economic impact of these tariffs on global growth, business profitability, and financial stability.

On Friday, the worst market crisis since COVID slammed into a higher gear as the S&P 500 plummeted 6% and the Dow plunged 5.5%. The Nasdaq composite dropped 5.8%.

Additionally, South Korea’s Kospi lost 5.6% to 2,328.20, while Australia’s S&P/ASX 200 lost 4.2% to 7,343.30, recovering from a loss of more than 6%.

Friday’s Crash describes the actual market performance from a specific day, April 5, 2025, where the indexes saw their sharpest declines from massive sell-offs since the COVID-19 pandemic, signifying the intensity of the immediate market panic due to the tariff-related fears.

Speaking to reporters last Sunday aboard Air Force One, Trump said he was not concerned about the massive sell-offs, adding, “Sometimes you have to take medicine to fix something.”

Nikkei index loses 8%

Tokyo’s Nikkei 225 index lost nearly 8% shortly after the market opened and futures trading for the benchmark was briefly suspended. It closed down 7.8% at 31,136.58.

Futures trading for Tokyo’s Nikkei 225 index was likely suspended because of the rapid and significant decline in the index. In Japan, as in many other markets, there are circuit breakers or trading halts built into the system to prevent excessive market volatility and to allow time for investors to absorb information, mitigate panic selling, and maintain market stability.

Last year, the Nikkei had a significant drop of over 12%, losing 4,451.28 points, which was the biggest points drop it has ever experienced, amid major concerns regarding the stability of the US economic market at the time. The index spiked the following day with Nomura Securities and Monex, the leading securities and investments firms in Japan, describing the subsequent gain as a "technical rebound". 

“The idea that there’s so much uncertainty going forward about how these tariffs are going to play out, that’s what’s really driving this plummet in the stock prices,” said Rintaro Nishimura, an associate at the Asia Group.

Nathan Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management, said more countries are likely to respond to the U.S. with retaliatory tariffs. Given the large number of countries involved, “it will take a considerable amount of time in our view to work through the various negotiations that are likely to happen.”

“Ultimately, our take is market uncertainty and volatility are likely to persist for some time,” he said.

Appearing on Fox News Channel’s “Sunday Morning Futures,” White House Trade Advisor Peter Navarro echoed Trump when he said investors shouldn’t panic because the administration’s approach to trade would usher in “the biggest boom in the stock market we have ever seen.”

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“People should just sit tight, let that market find its bottom, don’t get shook out by the panic in the media,” Navarro said.

Asia 

Among the biggest losers was Mizuho Financial Group, whose shares sank 10.6%. Mitsubishi UFJ Financial Group’s stock lost 10.2% as investors panicked over how the trade war might affect the global economy. Both Mizuho Financial Group and Mitsubishi UFJ Financial Group are large, multinational financial institutions with significant exposure to global markets. For example, Mizuho Financial Group operates in approximately 40 countries and regions, with 109 offices outside Japan. These banks have extensive international business operations, including investment banking, lending, and wealth management, which tie them directly to the health of the global economy.

Banks often decline early during global market plummets because they are highly sensitive to economic conditions. Economic downturns lead to decreased lending activity, increased credit risk, and lower profitability from investment banking, which directly impacts their revenue streams. Banks are also exposed to global markets, so declines in international markets can hurt their operations and asset values. Investor sentiment plays a key role, as banks are seen as barometers of economic health, and their stock declines can amplify fear, prompting further market sell-offs. 

Chinese markets often don’t follow global trends, but they also tumbled. Hong Kong’s Hang Seng dropped 13.5% to 19,770.51, while the Shanghai Composite index lost 7.3% to 3,096.58. In Taiwan, the Taiex plummeted 9.7%. China's strict regulations on capital flows and state control over key industries can make its markets less sensitive to global events. However, in times of heightened global uncertainty, even these markets can be impacted by international contagion.

E-commerce giant Alibaba Group Holdings fell 9.9%, and Tencent Holdings, another tech giant, lost 13%. Since Alibaba and Tencent are large and well-known stocks, they become easy targets for profit-taking in times of economic uncertainty.

Alibaba is deeply integrated into the Chinese economy; it also has a substantial global presence due to its international ventures and investments, making it a significant player in both the Chinese and global tech markets. Tencent Holdings, like Alibaba, holds significant influence in global markets due to its dominant position in the gaming industry (with titles like League of Legends and Honor of Kings).  These firms are often seen as monopolies in China's tech sector due to their dominant control over e-commerce, social media, gaming, and digital services

Asia is especially dependent on exports, and a large share goes to the United States. Countries in Asia with high export dependence on the United States are particularly vulnerable to trade tensions. According to the Lowy Institute's Asia Power Index, the top Asian countries by export dependence on the U.S. are:​

Vietnam: 17.3% of its exports go to the U.S., totaling $124 billion
Cambodia: 17.2% of its exports, amounting to $9.28 billion​
Japan: 14.0% of its exports, equating to $230 billion
South Korea: 13.6% of its exports, totaling $192 billion
India: 11.1% of its exports, amounting to $132 billion

Europe and the UK

European shares followed Asian markets lower, with Germany’s DAX falling 6.5% to 19,311.29. In Paris, the CAC 40 shed 5.7% to 6,861.27, while Britain’s FTSE 100 lost 4.5% to 7,694.00.

Some European countries have already vowed retaliatory measures. Spain's Prime Minister, Pedro Sánchez, announced that his government will implement a €14.1 billion ($15.66 billion) plan to mitigate the impact of the new U.S. tariffs on the Spanish economy. 

The EU has asserted that its retaliation to US tariffs could extend 'beyond customs duties'.

In an interview with Al Mayadeen yesterday, historian and journalist Dieter Reinisch revealed how EU politicians and diplomats are shrugging in powerlessness, admitting they underestimated the scale of Trump’s economic aggression.

Commodities and Forex

Oil prices also sank further, with US benchmark crude down $2.82 at $59.17 per barrel. Brent crude, the international standard, gave up $2.93 to $62.65 a barrel.

Exchange rates also gyrated. The US dollar fell to 145.56 Japanese yen from 146.94 yen. The yen is often viewed as a safe haven in times of turmoil.

Meanwhile, the euro rose to $1.1007 from $1.0962. 

Investors and market participants quickly adjust their demand expectations. The initial shock comes from the realization that a significant economic slowdown may follow. Oil prices are highly sensitive to these expectations because oil is a key input in global supply chains, transportation, and manufacturing. A sudden contraction in trade indicates lower demand for goods—and, consequently, for oil. This leads to a rapid sell-off in oil futures, driving prices down quickly.

Recovery and Recession

A big fear is that the trade war could cause a global recession between the United States and China. If it does, stock prices may fall further. Even a better-than-expected report on the US job market, usually the economic highlight of each month, wasn’t enough to stop the slide.

As of Friday, the S&P 500 was down 17.4% from its record set in February. This can be compared to the fragile market conditions during the COVID-19 pandemic, which impacted markets on a global scale.

A bounce back in selling occurred after China matched President Donald Trump’s Liberation Day Tariffs. The Commerce Ministry in Beijing ordered its own 34% tariff on imports of all U.S. products beginning April 10, among other measures, in response to the 34% tariffs imposed by the U.S. on imports from China.

The Federal Reserve could cushion the blow of tariffs on the economy by cutting interest rates. However, Federal Reserve Chair Jerome Powell said Friday that the higher tariffs could drive up expectations for inflation, and lower rates could fuel more price increases.