On Thursday, July 31, President Trump signed an executive order imposing tariffs ranging from 10% to 41% on imports from 68 countries and regions globally, effective from August 7. Following the announcement, Asian stock markets fell on Friday.
In Japan, the Nikkei 225 index dropped by 0.66% to 40,799.60 points, while South Korea’s Kospi index fell by 3.88% to 3,119.41 points.
Hong Kong’s Hang Seng Index declined by 1.07% to 24,507.81 points, and the Shanghai Composite Index slid by 0.37% to 3,559.95 points.
In Australia, the S&P/ASX200 index dropped by 0.92% to 8,662.00 points, India’s BSE Sensex fell by 0.72% to 80,599.91 points, and Taiwan’s TAIEX index decreased by 0.46% to 23,434.38 points.
Meanwhile, on Wall Street, the stock market ended Thursday with significant losses, with the initial surge in tech stocks fading and the healthcare sector leading the market lower.
The S&P 500 index declined by 0.4%, marking the third consecutive trading day in the red. Despite a slight dip from the record high set on Monday, the index saw a 2.2% increase in July and a year-to-date rise of 7.8%.
The Dow Jones Industrial Average fell by 0.7%, while the Nasdaq Composite Index closed with a less than 0.1% decrease.
Around 70% of stocks in the S&P 500 index experienced declines, with the healthcare sector exerting the greatest drag on the market.
Following a White House directive for major pharmaceutical companies to lower prices and make other adjustments within the next 60 days, healthcare stocks took a hit.
Stocks of pharmaceutical companies like Eli Lilly & Co. dropped by 2.6%, UnitedHealth Group by 6.2%, and Bristol-Myers Squibb by 5.8%.
However, some major tech stocks defied the trend and rose, mitigating the overall market decline impact.
Meta, the parent company of Facebook and Instagram, saw a significant surge of 12.6% to $782.87 per share, surpassing expectations with a 22% year-over-year revenue increase to $47.52 billion in the second quarter.
Microsoft’s stock soared by 5.6% in early trading on Friday to $541.85, pushing its market value to $4.03 trillion, making it the second company globally to exceed a $4 trillion market cap.
Lorraine Tan, the Director of Asian Equities Research at Morningstar, mentioned that Trump’s adjustment of tariffs in Asia was “expected” and is unlikely to significantly impact the market.
“In fact, the tariffs on larger exporting countries like South Korea and Japan at 15% and Southeast Asian countries at 19% are quite reasonable, especially after the initial turmoil on April 2,” Tan wrote in a report on Friday.
She noted that the focus now is on trade negotiations between the US and China.
Kai Wang, the Asian Equities Market Strategist at Morningstar, stated in the same report, “Considering that there seems to be a framework in place from the past three months of US-China trade negotiations, a new 90-day extension may be viewed by investors as a negative factor.”
“With Trump still pressuring China indirectly through measures against transshipments and other loopholes, negotiations could collapse completely,” he said, “The extension is a signal… and the performance of the Hang Seng Index and the CSI 300 Index over the past two days largely supports this argument.”