Fears regarding the global economy's future health continue to unsettle markets worldwide, as investors face concerns over tariffs and indications that consumer spending is decreasing.
The S&P 500 experienced its worst day of the year on Monday, with the subsequent sell-off extending into Asian market trading on Tuesday.
Asian markets mostly opened lower, with Japan’s Nikkei 225 index dropping approximately 2 percent, significantly impacted by declines in technology stocks. Stock markets in South Korea and Taiwan similarly fell around 2 percent in early trading.
In contrast, equity markets in China showed slightly better performance, with shares in Shanghai and Shenzhen decreasing by around 0.2 percent during morning trading, while Hong Kong's market was down by less than 1 percent.
Investor caution regarding the U.S. stock market has increased in recent weeks due to President Trump's inconsistent stance on tariffs, leading to confusion and uncertainty.
Concerns about the inflationary impacts of tariffs, alongside a generally pessimistic economic outlook, catalyzed a sell-off in a market already viewed as potentially overvalued by investors.
Despite current robust economic data, surveys of consumers, business leaders, and economists reflect growing pessimism. Analysts at JPMorgan now assess a 40 percent likelihood of a global recession.
In the U.S. on Monday, technology stocks experienced significant losses, with Tesla shares falling more than 15 percent as investors pondered declining sales and concerns over CEO Elon Musk's distractions related to his role in the Trump administration. Shares of Alphabet, Apple, and Nvidia each fell over 4 percent.
Technology shares in Japan also saw declines, with Sony, SoftBank, Hitachi, and Fujitsu each dropping more than 4 percent during early Tuesday trading. Other tech declines in Asia included Taiwan Semiconductor Manufacturing Company and Apple supplier Foxconn, both falling by about 3 percent.
Japanese automakers such as Toyota Motor and Honda Motor, as well as South Korean manufacturers Hyundai Motor and Kia, experienced slight dips in stock prices. Nissan Motor, facing more significant challenges with slumping sales and political issues, saw its stock price plummet by over 4 percent on Tuesday.
Japanese and South Korean automakers are expected to be particularly vulnerable to a potential 25 percent tariff on foreign cars, which President Trump indicated could take effect as soon as April 2.
Goldman Sachs noted on Friday that stocks comprising the main equity indexes in Taiwan, South Korea, and Japan would be most exposed in Asia if the Trump administration implemented a universal tariff on trading partners.
Late on Monday, Delta Air Lines issued a warning by cutting its profit forecast for the first three months of the year, citing rising economic concerns among consumers that was affecting air travel demand.
Delta attributed the decline in demand to a “recent reduction in consumer and corporate confidence caused by increased macro uncertainty.”
The Trump administration has not alleviated investors’ apprehensions, maintaining a firm stance on tariffs directed at major U.S. trading partners such as Canada, Mexico, and China. Over the weekend, President Trump did not rule out the possibility that his policies could lead to a recession.