Trump Tariffs Spark Asian Market Meltdown: Stocks Dive, Rupee Crashes & Gold Soars

Stocks slide across Asia: Major indexes fell on Friday (Sep 26). Japan’s Nikkei 225 dropped about 0.9%, Hong Kong’s Hang Seng lost ~1.3%, India’s Sensex fell ~0.9% and China’s Shanghai Composite ~0.7% ^[1]. Singapore’s STI slipped ~0.2% ^[2] and Taiwan’s Taiex was down ~0.4% ^[3]. The losses were led by tech, pharma and export-oriented shares.
U.S. tariffs and Fed jitters: Markets were rattled by President Trump’s fresh tariffs (100% on pharma, etc.) and stronger U.S. data that cut expectations of aggressive Fed rate cuts ^[4] ^[5]. As IG’s Tony Sycamore warned, the announcement “adds to a bit of a shaky backdrop” for risk assets ^[6]. Investors pared rate-cut bets (Fed futures now price only ~0.4% cuts by year-end) ^[7].
China economy and policy: China’s Q3 data were mixed. Industrial profits returned to growth (up 20.4% YoY in Aug) after price-support measures ^[8], but activity remains weak amid the property slump. Beijing’s central bank pledged to “better implement an appropriately loose monetary policy” – promising ample liquidity, credit support and fiscal coordination to bolster growth ^[9].
India hit by trade actions: India’s markets were among the day’s weakest. IT and pharmaceutical stocks plunged (Nifty sank ~0.95%, its 3-week low) after Trump raised H-1B visa fees and imposed steep drug tariffs ^[10] ^[11]. Foreign funds sold about $1.4 billion of Indian stocks in the week ^[12]. ICICI Securities’ Pankaj Pandey noted “things are not looking good… given the string of negative newsflows around export-oriented sectors” ^[13].
Currencies under pressure: The Indian rupee slid to near-record lows (~₹88.7–88.8 per USD) on Friday ^[14] ^[15]. One report warned it “could slip to an all-time low” after the tariff news ^[16]. South Korea’s won also fell to a 4-month low (~₩1,414/USD) as U.S.-Korea trade talks stalled ^[17]. By contrast, China’s yuan held roughly steady and the dollar hovered around ¥150 in Tokyo (about JPY0.0067/USD) ^[18] ^[19]. (The euro and pound were relatively flat.) Bond yields drifted higher: U.S. 10-year Treasuries were ~4.17% ^[20], and Korea’s 10-year jumped to ~2.97% (up 10bps) ^[21].
Commodity price moves: Safe-haven gold surged to new records. Spot gold hit ~$3,752/oz on Friday ^[22], despite dealers in China offering discounts (suggesting strong physical demand) ^[23]. Brent crude held around $69–70, near seven-week highs, as Russia cut fuel exports ^[24]. Copper and soy showed mixed moves (copper down slightly, soybeans mildly up ^[25]).
Analyst insights: Many strategists noted the tariff hits were largely expected. As Citi’s Ken Peng put it, “the market is calling [Trump’s] bluff” and selloffs may be limited ^[26]. Jefferies’ Akash Tewari agreed it’s “a win for pharma” since firms are already building U.S. plants ^[27]. Morningstar’s Lorraine Tan warned that though final tariff rates may be lower, “near-term uncertainty could weigh on share prices” ^[28]. In South Korea, KB Kookmin’s Lee Min-hyeok said “amid a strong dollar, the won is weakening faster as uncertainty is high” ^[29]. At Spartan Capital, Peter Cardillo observed investors “are not overly reacting” to the tariff shock, treating it as largely priced in ^[30]. Multibank FX analysts also expect India’s RBI to intervene to limit rupee losses, but still see it testing the ₹89/$ level ^[31].
Policy responses: Governments are moving to stabilize markets. China’s PBOC committed to maintaining ample liquidity and better credit flow ^[32]. South Korea announced it will open FX trading to 24 hours to attract investors ^[33] and reportedly warned Washington that the $350 billion investment package hinges on a workable deal. India’s central bank intervened to support the rupee ^[34] (street reports note it prevented a record low). Singapore noted that pharma exports worth $3.1 billion could face U.S. tariffs, intensifying trade negotiations ^[35].
Near-term outlook: Traders remain cautious. Markets will watch Friday’s U.S. core PCE inflation report (Fed’s preferred gauge) for clues on rate policy – as one analyst noted, the data “could provide further clarity on the outlook for rates” ^[36]. The upcoming U.S. Q3 earnings season will be crucial; Charles Schwab’s Kevin Gordon warned that “the earnings season will become the bigger test” after the tariff-related news ^[37]. Geopolitically, any news on U.S.–China or U.S.–India trade talks could swing sentiment. Overall, analysts expect continued volatility into next week before a more stable trend emerges.

Regional Stock Market Performance

China & Hong Kong: Mainland markets were modestly lower. The Shanghai Composite traded near 3,820–3,830 (about –0.7%) on Friday ^[38], dragged by global tech weakness and trade jitters. Hong Kong’s Hang Seng fell over 1% on Friday ^[39], led by declines in technology and financials. Chinese data showed some stabilization – for example, August industrial profits jumped 20.4% YoY (recovering from a July decline) ^[40] – but analysts note demand remains weak. Beijing’s central bank, meeting on Tuesday, said it would “step up adjustments” and keep policy loose to shore up growth ^[41]. The PBOC also signaled it would inject more credit and monitor bond markets closely. Still, with exports under pressure, Chinese equities have struggled to sustain gains.

Japan: Tokyo’s Nikkei 225 reversed earlier gains and closed weaker. After recovering +0.3% on Thursday (amid talk of possible BOJ tightening ^[42]), the Nikkei slid ~0.9% on Friday ^[43]. The Topix index similarly fell. Exporters were mixed – autos held up somewhat – but financials and tech gave back recent gains. Japanese traders are eyeing domestic data: Tokyo’s CPI report (due in coming days) and the minutes of the Sept. BOJ meeting are on the docket. Note: Analysts say BOJ officials have signaled readiness to hike if the economy/price outlook permits, so any surprises in CPI could move markets.

South Korea: Seoul’s KOSPI plunged on tariff fears. The KOSPI fell over 2% on Friday ^[44], its worst daily loss in weeks. Heavyweights like Samsung and SK hynix fell after U.S. patent sanctions on Korean chips were announced. Analysts pointed out that an unresolved trade deal with the U.S. (including the $350 billion investment component) has put extra pressure on the won. Indeed, the won slid to ~1,414 per dollar on Friday (a 4-month low) ^[45]. KB Securities’ Lee Min-hyeok said “the won is weakening faster as uncertainty is high” over the stalled U.S. pact ^[46]. Yields on Korea’s 10-year bonds jumped over 10 bps to ~2.97% ^[47] (highest since March), reflecting the risk-off mood. South Korea’s government and central bank have assured they will use “all available instruments” to stabilise markets, including extending FX market hours for overseas investors ^[48].

India: Friday’s session saw Indian stocks drag lower. The Nifty50 fell ~0.95% and the Sensex ~0.9% ^[49], both marking a three-week low for the week. IT and pharma sectors led losses. For example, Infosys, TCS and Wipro dropped sharply after Trump raised H-1B fees and announced 100% tariffs on branded drugs ^[50]. ICICI Securities’ Pankaj Pandey commented that “things are not looking good… given the string of negative newsflows around export-oriented sectors” ^[51]. Domestic banks and oil stocks helped cap losses, but foreign investors resumed selling (roughly $1.4 billion outflow this week) after recent inflows. Indian bond yields and currency were also hit: the rupee tumbled, as detailed below.

Southeast Asia & Others: In Singapore, the STI closed roughly flat to slightly lower (–0.2% on Friday ^[52]). A rally in local REIT IPOs and property stocks was offset by the global tech selloff. Singapore’s market has been buoyed by record IPO volumes this year (e.g. the Centurion REIT IPO ^[53]), but traded in line with Asia. Taiwan’s Taiex followed regional peers: after hitting all-time highs earlier, it eased ~0.4% on Wednesday’s close ^[54] (though official Friday data show small weekly gains). Across ASEAN, markets were mixed but generally cautious, as U.S. cues and China policy guided sentiment.

Currencies and Bonds

Currencies: The trading pictures for major Asian currencies diverged sharply. India’s rupee was the clear laggard, weakening toward record lows around ₹88.7–88.8 per USD ^[55] ^[56]. A Reuters report warned it “could slip to an all-time low” under the new tariff regime ^[57]. Traders noted that up to 35% of India’s pharma exports could face duties, heightening investor caution. By contrast, China’s yuan (CNY/USD) traded almost flat (reference rate ~7.11) and offshore yuan eased only modestly. Japan’s yen remained near ¥150 per dollar (trading around JPY0.0067/USD) – again near recent lows – as the dollar was buoyed by resilient U.S. data ^[58]. The Korean won’s slide (to ~₩1,414/USD) was driven by U.S. pressure, but South Korean policymakers hinted at intervention if needed. Overall, the U.S. dollar index rose slightly, reflecting outperformance versus Asian currencies.

Bonds: Bond yields ticked higher on Friday amid the risk-off shift. In the U.S., 10-year Treasury yields were about 4.17% ^[59] (up a couple bps), after Federal data trimmed rate-cut bets. In Asia, Japan’s 10-year yield stayed near 1.65% ^[60] (around its recent range). Notably, South Korea’s 10-year bond spiked to ~2.966% ^[61] (up ~11 bps), its highest since March, as funds flowed out of equities. In India, the 10-year yield climbed above 7.5% (local press), though the RBI hinted at bond-buying if needed. Credit spreads widened slightly in Asia on the risk-off tone, though appetite for safe-haven JGBs and Chinese government bonds remained, given expected policy support ^[62].

Traders on the foreign exchange floor in Seoul monitor the won and stock index boards. The won hit four-month lows (~₩1,414/USD) on tariff fears ^[63], reflecting South Korea’s market jitters. (Image: Reuters)

Commodities

Gold: Gold prices extended their bull run. Spot gold jumped again on Friday, reaching about $3,752/oz (up ~0.5% on the day) ^[64]. U.S. gold futures also hit new peaks. A Reuters commodities report noted that Chinese dealers were offering larger discounts (up to $71/oz off spot ^[65]) even as consumers and investors continued to buy via bars and coins. For example, an industry group in India said premiums on gold coins hit multi-year highs as festival buying kicked in ^[66]. The surge reflects gold’s safe-haven bid amid policy uncertainty, the weak dollar, and expectations that global central banks will stay loose. (As one analyst quipped, the market “is calling [the tariff] bluff” – i.e. still upbeat on demand ^[67].)

A Beijing shop displays gold necklaces – physical demand remains robust in Asia even as prices hit record highs ^[68]. Gold jumped to ~$3,790/oz during the week, driven by safe-haven buying. (Image: Reuters)

Oil: Oil markets held near recent highs. Brent crude futures traded around $69.70–$69.90 on Friday ^[69], modestly below the $69.75 settlement and ~$69.4 spot quoted in Asia ^[70]. U.S. WTI was ~ $65.2–65.5. Oil strengthened this week on news that Russia would limit fuel exports to year-end ^[71], and geopolitical tensions (Ukraine/Turkey/Israel-Iran). Analysts noted that although U.S. growth surprises capped gains (“the initial reaction… was a sell-off,” said Phil Flynn ^[72]), supply cuts kept a bid under prices. Higher oil tends to feed into Asian inflation concerns, but for now it was a modest net positive for exporters (India) and a caution for importers (China, Japan). Other commodities moved mixed – copper was slightly softer around $9,350/t ^[73], while agricultural commodities like soybeans firmed on China demand (+0.2%) ^[74].

A worker atop an oil tanker in Kolkata (file photo) – Asia’s crude imports are price-sensitive. Oil held near seven-week highs after Russia cut exports ^[75], though analysts caution that expensive oil may curb fuel demand in China and India ^[76] ^[77]. (Image: Reuters)

Analyst Commentary and Sentiment

Analysts were quick to weigh in on the tumult. On tariffs: Many stressed that much of the bad news was already known. Citi strategist Ken Peng said flatly “the market is calling [Trump’s] bluff,” noting that only a 3% dip was seen despite 100% tariffs ^[78]. Jefferies’ Akash Tewari similarly argued that most companies had already pledged U.S. investment, so the tariffs “should not have a material impact” on valuations ^[79]. Morgan Stanley had noted earlier that Asia’s margin debt was high, leaving markets vulnerable, so a shock could exacerbate volatility. On Fed/markets: Tony Sycamore (IG) summed up the mood: Trump’s tariffs “sort of adds to a shaky backdrop… in terms of risk assets” ^[80]. Wells Fargo economists noted the U.S. data gave the economy “a new lease on life,” unwinding some Fed easing hopes ^[81]. Traders agree – a Bloomberg compilation reported U.S. rate-cut bets fell after the data. On Asia outlook: Some strategists pointed to technical factors. One research note reminded that short-term bullish swings had been already priced in (hence “not overly reacting” per Peter Cardillo ^[82]). Others warned the next catalyst would be corporate earnings: Charles Schwab’s Kevin Gordon said bluntly “the earnings season will become the bigger test” for equity markets ^[83]. In sum, analysts see near-term uncertainty – but many predict the recent sell-off may be shallow if trade tensions ease.

Forecast and Near-Term Outlook

Looking ahead, market watchers expect continued caution. U.S. data will be key: Friday’s core PCE inflation report (the Fed’s preferred gauge) is due and “could provide further clarity on the outlook for rates,” as Sycamore noted ^[84]. A higher-than-expected print might reinforce Fed hawkishness; a cooler read could revive hopes for rate cuts in 2026. The start of Q3 earnings season will also be closely watched after mixed guidance from tech firms. Any news on U.S.–China or U.S.–India trade negotiations could spark fresh moves: for example, reports that India may consider alternate jet engines (France’s Safran) if the U.S. deals falter. ^[85].

For Monday’s Asia open, analysts advise to monitor global cues: U.S. markets (with futures slightly lower) and currency flows (dollar staying firm). Indonesian and Chinese policy signals (e.g. Beijing’s new “digital consumption” measures ^[86]) may factor into local rallies. Overall, most forecasts suggest a volatile start to the week, with many traders holding off large bets until the U.S. inflation picture and trade details become clearer. However, if tariffs remain the “starting point for negotiations” (as Milali of Edmond de Rothschild put it ^[87]), markets could stabilize and even rebound into October, especially if Asian central banks lean dovish to cushion growth.

Sources: Authoritative market news and analysis from Reuters, with data on index moves, FX and commodity prices ^[88] ^[89] ^[90] ^[91]. Commentary from analysts and institutions are cited directly (IG, ICICI, Citi, Reuters Equity Analysts, etc.) ^[92] ^[93] ^[94] ^[95]. All data and quotes are drawn from the cited sources.