Asian shares plummeted on Friday following a significant decline in U.S. stocks, erasing much of the gains made the day before. Concerns over President Donald Trump’s trade policies contributed to a sharp drop in Japan’s Nikkei 225 share index by 5.6%, which later recovered slightly to a 4.2% decline. The yen strengthened against the U.S. dollar, while the dollar weakened against the euro. South Korea’s Kospi and Australia’s S&P/ASX 200 also experienced losses. In China, Hong Kong’s Hang Seng and Shanghai’s markets saw slight declines, while Taiwan’s Taiex rose as investors anticipated increased orders amid the China-US trade tensions. China announced additional countermeasures against the U.S., causing U.S. stocks to plummet. Investors are skeptical of Trump’s tariff delay as a genuine pivot in policy. The market reaction has been described as a “sugar high” fading, with Asia expected to feel the impact. The stock market saw significant drops, and the bond market was also affected. The European Union agreed to postpone trade retaliation measures for 90 days.
Investors were feeling uneasy as Treasury yields surged suddenly. There could be various reasons for this spike, such as hedge funds selling Treasurys for cash and international investors divesting from U.S. government bonds due to trade tensions. Higher Treasury yields can add pressure on the stock market and lead to increased rates for mortgages and loans for American households and businesses. Following President Trump’s change in tariff policy, the 10-year Treasury yield eased to 4.30% after hitting a high of 4.50% earlier in the week. However, the yield rose to 4.40% on Thursday and was at 4.39% early Friday. In other market news, U.S. benchmark crude oil dropped to $59.70 per barrel, while Brent crude fell to $63.03 per barrel in early Friday trading.
