^{Source: AP News}

Overview: Asia-Pacific Markets in Turmoil Amid Trade Tensions

Asia-Pacific equity markets saw a turbulent trading session on Friday, with Japan leading the losses as geopolitical friction between the United States and China reignited fears of a drawn-out trade war. While some regional indices showed resilience, Japan’s benchmark stock indexes experienced sharp declines, erasing a large portion of the gains seen earlier this month.

The downturn comes after Wall Street resumed its sell-off overnight, fueled by investor anxiety over the future of global trade relations following the U.S. administration's latest tariff decisions.

Market Summary: Japan Bears the Brunt, Australia and Korea Also Slip

Japan’s Nikkei 225 plunged 2.96%, closing at 33,585.58, marking one of the steepest single-day drops in months. The broader Topix Index also tumbled 2.85%, ending the day at 2,466.91. The sell-off wiped out nearly $150 billion in market value from Japanese equities in a single session.

Australia’s S&P/ASX 200 fell 0.82%, settling at 7,646.50, while South Korea’s Kospi declined 0.5% to close at 2,432.72. However, small-cap stocks in Korea fared better, with the Kosdaq Index surging 2.02% to finish at 695.59—driven by speculative buying in biotech and tech startups.

In contrast, Hong Kong’s Hang Seng Index rose 1.13% to end at 20,914.69, while China’s CSI 300 Index posted modest gains, climbing 0.41% to 3,750.52. Analysts attributed this to a slight recovery in Chinese tech shares, along with bargain hunting following weeks of underperformance.

Trade War Tensions Escalate: Tariff Drama Reignites Market Jitters

Investor confidence was further rattled after U.S. President Donald Trump reversed course on reciprocal tariffs earlier this week. While the president granted a 90-day delay on new tariff implementations for most countries, China remains a key target.

According to the White House, the total effective tariff rate on Chinese imports now stands at a staggering 145%—comprised of a 125% new reciprocal duty and an additional 20% penalty linked to the fentanyl-related public health emergency.

This escalation adds to the already tense atmosphere surrounding U.S.-China trade talks, which have yielded little progress in recent months.

Expert Commentary: “Delay Doesn’t Mean Resolution”

Economists and analysts remain cautious despite the temporary reprieve. In a note to investors, ANZ analysts stated:

“The extension of time does not alleviate uncertainty. There is deep skepticism about whether these negotiations will yield meaningful progress, and that skepticism is already impacting investment decisions and economic forecasts.”

Market participants are also concerned about how these tariffs will impact supply chains and corporate earnings in the second and third quarters of 2025.

Wall Street Recap: U.S. Stocks Sink Again Despite Earlier Rebound

U.S. markets, which had briefly rallied on the back of the tariff delay news, reversed gains sharply on Thursday:

• S&P 500 fell 3.46% to 5,268.05
• Nasdaq Composite dropped 4.31%, closing at 16,387.31
• Dow Jones Industrial Average slid 1,014.79 points, or 2.5%, finishing at 39,593.66

The losses underscore the market’s fragile state as investors wrestle with rising interest rates, inflationary pressures, and now, revived fears of global trade disruption.

U.S. futures pointed to a tentative rebound early Friday, with S&P 500 futures up 0.3%, Nasdaq 100 futures adding 0.1%, and Dow Jones futures rising by 28 points—though analysts warn these gains may be short-lived if tensions escalate further.

China’s Tech Sector: A Glimmer of Optimism?

Amid the broader downturn, China’s tech-heavy indices showed some positive momentum. According to a report from Bloomberg, several Chinese AI and semiconductor stocks posted intraday gains of more than 3%, boosted by speculation around Beijing’s upcoming stimulus package for innovation and manufacturing.

This minor uptick suggests some investors are looking beyond the short-term uncertainty toward long-term growth potential in China’s domestic market.

The Bigger Picture: Economic Growth Risks Loom

The ripple effects of renewed trade tensions could be felt globally. Economists at Goldman Sachs estimate that a prolonged tariff battle between the U.S. and China could shave 0.7 to 1 percentage point off global GDP growth in 2025.

Meanwhile, Oxford Economics warned that prolonged volatility may reduce private sector investment by $300 billion worldwide, particularly in export-heavy economies such as Japan, South Korea, and Germany.

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