asian markets rattled: trade war fears send stocks tumbling
Hong Kong, Monday, 2 June 2025.
asian markets faced a turbulent monday. escalating us-china trade tensions triggered a sell-off. hong kong’s hang seng index and tokyo’s nikkei average both experienced sharp declines. president trump’s remarks about raising tariffs on chinese steel intensified market jitters. investors are now seeking refuge in safe-haven assets, such as the yen. the nikkei briefly plunged by over 650 points. this downturn highlights the sensitivity of asian equities to us-china trade dynamics.
hang seng index decline
Hong Kong’s Hang Seng Index experienced a significant decline, closing the morning session down 511.32 points, or 2.19%, to reach 22,778.45 [1]. The intensified concerns over US-China trade friction weighed heavily on the market [1]. Trading activity remained subdued due to the closure of mainland Chinese markets, resulting in larger price swings [1]. This downturn reflects investor anxiety surrounding the potential escalation of trade tensions and its impact on regional economies [GPT].
tokyo market reaction
The Tokyo stock market also felt the impact of the trade tensions, with the Nikkei average temporarily falling by nearly 650 points in the afternoon session [2]. The Nikkei’s decline reflects a broader trend of risk aversion among investors, who are increasingly concerned about the potential economic fallout from escalating trade disputes [2]. This situation is further compounded by increased selling in stock index futures during the lunch break, adding to the downward pressure on the market [2].
currency market impact
In the currency market, the yen strengthened against the dollar as investors sought safer assets [3]. At 12:00 PM, the dollar traded at ¥143.53-55, a ¥0.50 increase for the yen compared to the previous Friday at 5:00 PM [3]. President Trump’s statement on May 30, asserting China’s breach of agreements and proposing a 50% tariff hike on steel, intensified concerns [3]. This has led to a risk-off sentiment, driving investors towards the yen and away from the dollar [3].
a-share market outlook
Despite the current market anxieties, some analysts suggest that China’s A-share market may exhibit resilience in June [6]. Historically, June has shown mixed performance, with positive trends observed in 7 out of 15 years since 2010 [6]. Policy and external events, along with underlying fundamentals and liquidity, are key factors influencing A-share performance [6]. Expectations of proactive policies and potential improvements in economic data could support a ‘vibration is strong’ trend, though uncertainties surrounding us-china trade negotiations remain [6].
sector specific recommendations
Analysts suggest a focus on technology and consumer sectors for investment opportunities in June [6]. These sectors are expected to outperform, driven by policy support and strong growth prospects [6]. Additionally, there might be tactical opportunities in select core assets and cyclical industries [6]. Sectors like computer software, automation, ai, semiconductors may see benefits [6]. Investors are advised to consider sectors with improving fundamentals such as innovative pharmaceuticals and new energy [6].