[SINGAPORE] The sell-off continued as Asian markets tumbled on Monday (Apr 7) morning, following US President Donald Trump’s sweeping tariff announcement last Wednesday.
The Straits Times Index (STI) plummeted by 8.5 per cent, falling below 3,500 with a drop of more than 325 points. This marked the largest intraday decline since the STI crashed 8.9 per cent during the subprime mortgage crisis on Oct 24, 2008, and surpassed the 8.4 per cent tumble that the index took during the Covid pandemic-induced crash on Mar 23, 2020.
In morning trading, DBS was down more than 10.6 per cent, with OCBC declining more than 7 per cent, while UOB slid 8.8 per cent.
Among the largest decliners were maritime stocks Seatrium tumbling 10.3 per cent, Yangzijiang Shipbuilding down 7.8 per cent, and Keppel falling 7.6 per cent. Meanwhile, local bourse SGX fell by more than 7.7 per cent.
The Nikkei 225 index in Japan fell about 8.6 per cent shortly after trading opened, following a 5.4 per cent drop last week in the two days following the announcement on Wednesday. The yen strengthened against the Singapore dollar by 2.3 per cent.
In Australia, despite the country only being hit with 10 per cent baseline tariffs, the ASX 200 index slid more than 6 per cent in the morning. The Australian dollar plummeted to just 81 Singapore cents, a level that was last seen in April 2020 during the Covid pandemic-induced crash.
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South Korea saw the Kospi index retreat by up to 5.2 per cent, falling almost 100 points since closing on Friday. In Hong Kong, the Hang Seng index slid more than 2,000 points in a 9.3 per cent decline.
US stocks, which lost over US$5 trillion over two days last week, are likely to fall further, going by the latest performance of key index futures. Dow futures dropped more than 1,400 points, or 3.7 per cent, while S&P futures shed more than 4.8 per cent.
The US dollar has strengthened more than 1 per cent against the Singapore dollar since Friday, last fetching SGD$1.3464 on Monday morning. Commodities including gold also took a beating.
Seismic shock
Global markets and economies are still struggling to deal with the “seismic” tariff shock triggered last week, said DBS chief economist Taimur Baig in a report on Monday.
“Despite the spate of announcements, there is still substantial fear that more measures are to come,” Baig said. “Perhaps more critical is the notion that nations trying to do a deal with the US will not be able rest easy upon signing agreements, as no deal with US seems to be reliable any longer,” he noted.
Trump’s announcement, which his administration had previously branded a “Liberation Day” for the US, slapped baseline tariffs of 10 per cent on all countries, and additional country-specific reciprocal tariffs on roughly 60 “worst offenders”. These include Cambodia with 49 per cent, Vietnam facing 46 per cent and Thailand with 36 per cent.
The tariffs also included a 34 per cent reciprocal tariff imposed on China, prompting Beijing to respond with an identical tariff of 34 per cent on Friday.
While Singapore has only been hit with the 10 per cent baseline tariffs, the Monetary Authority of Singapore is expected to ease its monetary policy during its upcoming policy review in April, said DBS economist Chua Han Teng.
Minister for Trade and Industry Gan Kim Yong told reporters on Thursday (Apr 3) that Singapore’s official gross domestic product growth forecast may be downgraded from the current range of between 1 and 3 per cent, as the situation has “turned out to be worse” than expected when the projection was made.
“Singapore’s deep integration in the global supply chain makes it vulnerable to a broader global trade and manufacturing slowdown,” said Chua. However, he noted that the negative impact on the country might be mitigated by the exemption of pharmaceutical and semiconductor products from the reciprocal tariffs.
