A wave of apprehension swept through most Asia-Pacific financial markets on Monday, with major indices closing predominantly lower after US President Donald Trump announced a significant escalation in trade protectionism by declaring he would double tariffs on steel imports to 50%.
This move, effective from Wednesday, reignited concerns about global trade stability and weighed heavily on investor sentiment across the region, including a subdued close for Indian benchmarks like the Sensex.
The primary catalyst for the market downturn was President Trump’s declaration, made during remarks to US steelworkers at US Steel’s Irvin Works in West Mifflin, Pennsylvania.
“We’re going to bring it from 25% to 50%, the tariffs on steel into the United States of America,” Trump stated, adding that these steep tariffs would “further secure the steel industry”.
He later confirmed via a post on Truth Social that the new steel tariffs will commence on June 4.
This aggressive stance on trade immediately cast a pall over markets reliant on international commerce.
Regional market reaction: broad declines with few exceptions
The impact of Trump’s announcement was felt across Asian bourses.
Japan’s benchmark Nikkei 225 fell sharply by 1.30% to close at 37,470.67, while the broader Topix index declined 0.87% to 2,777.29.
In South Korea, the Kospi ended the trading day nearly flat at 2,698.97, showing some resilience.
However, the small-cap Kosdaq managed to rise by 0.81% to 740.29, with investors also looking ahead to the country’s presidential election scheduled for June 3.
Australia’s S&P/ASX 200 slipped 0.24% to close at 8,414.1.
Hong Kong’s Hang Seng index also declined, dropping 1.2%.
It’s worth noting that markets in China, Malaysia, and New Zealand were closed for public holidays, which may have thinned regional trading volumes.
In economic news from Japan, factory activity contracted at its slowest pace in five months in May, offering a slight glimmer of improvement in the manufacturing sector.
The final au Jibun Bank Japan manufacturing purchasing managers’ index (PMI) rose to 49.4 in May from 48.7 in April.
While this marked the 11th consecutive month the index remained below the 50-point threshold separating contraction from expansion, the uptick was seen as a tentative positive.
“There were tentative signs of a potential improvement in the sector’s performance over the coming year … staffing levels increased at the fastest pace in over a year,” commented Annabel Fiddes, economics associate director at S&P Global Market Intelligence.
Indian markets: Sensex succumbs to global pressure
Indian equity benchmarks mirrored the broader regional caution.
The BSE Sensex closed 77 points lower, while the Nifty 50 also dipped, finishing below the 24,700 mark.
Earlier in the session, India’s Nifty 50 was reported to be down 0.10%.
One of the few notable gainers in an otherwise subdued Indian market was Adani Ports, which saw its shares rise by 2%.
US market undercurrents: futures dip after strong May
The renewed trade concerns also impacted US stock futures, which fell as Wall Street prepared for the start of a new trading month following a strong performance in May.
S&P 500 futures traded down 0.3%, a sentiment echoed by Nasdaq-100 futures. Futures tied to the Dow Jones Industrial Average also declined by 108 points, or 0.3%.
This came after a mixed close for the three major US averages on the preceding Friday.
The S&P 500 was little changed, inching down by 0.01% to end at 5,911.69, but still closing out a significant winning month.
The Nasdaq Composite slid 0.32% to 19,113.77, while the Dow Jones Industrial Average managed to add 54.34 points, or 0.13%, to finish at 42,270.07.
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