Introduction
The recent developments in the financial markets have been significantly characterized by turbulence, triggered by the tariff threats from the USA towards China and other countries. Despite these challenges, there are signs of recovery in Japan, while the situation in China remains tense.
Nikkei and Japan
Recovery of the Nikkei: After a sharp decline last week, the Nikkei index rose by about 6% on April 8, 2025, recovering from a 1.5-year low. This upswing is partly attributed to the positive developments in the US tech industry.
Willingness to Talk from the USA: The USA has shown a willingness to engage in talks with Japan, which could have positive effects on the Nikkei. Japanese politicians, like Prime Minister Shigeru Ishiba, are working to lower US tariffs on Japanese products, particularly in the automotive sector.
China and Chinese Stocks
Tariff Threats and Yuan Depreciation: The Chinese stock markets are under severe pressure as the USA threatens further tariffs, and China may devalue the Yuan to improve the competitiveness of its exports. However, this could lead to capital flight.
Market Reactions: The CSI 300 index, which encompasses the stock markets in Shanghai and Shenzhen, fell by about 5.3%. The Hang Seng index in Hong Kong recorded a decline of 10%, marking the worst daily fluctuation since 2008.
Taiwan
Reaction to US Tariffs: Taiwan has announced that it will not impose retaliatory tariffs against the USA. Instead, Taiwan plans to increase US imports and take other measures to reduce the trade imbalance.
Global Impact
Stock Market Crash and Financial Crisis: Global stock markets are severely affected as the USA’s tariff threats lead to increased risk aversion. The S&P 500 has lost about five trillion US dollars in value, and both the DAX and the Nikkei have also been heavily impacted.
Economic Concerns: The proposed tariffs stoke fears of a potential global economic crisis, leading to increased demand for safe assets such as government bonds.