Asia’s main stock indexes fell on Monday as White House officials showed no sign of backing off from their sweeping tariff plans and investors risked a US interest rate cut as early as May.

Futures markets have been quick to price in a near five-quarter-point cut in US rates this year, while Treasury yields have fallen sharply and the dollar has been hit.

The carnage came as President Donald Trump told reporters that investors would have to take their medicine and that he would not make a deal with China until the US trade deficit is resolved. Beijing said the market had been talking about its plans for retaliation.
“The only real circuit breaker is President Trump’s iPhone and he’s shown little sign that the market sell-off is bothering him enough to reconsider a policy stance he’s believed in for decades,” said Sean Callow, senior FX analyst at ITC Markets in Sydney.
Investors had thought the loss of trillions of dollars in wealth and the potential hit to the economy would cause Trump to reconsider his plans.
“The scale and disruptive impact of US trade policies, if they persist, would be enough to tip a still-healthy US and global expansion into recession,” said Bruce Kasman, chief economist at JPMorgan, risking a 60% downside.
“We continue to expect the first Federal Reserve easing in June,” he added. “However, we now assume the committee will cut rates at every meeting through January, lowering the top of the funds rate target range to 3.0%.”
S&P 500 futures fell 3.1% in volatile trading, while Nasdaq futures fell 4.0%, adding to nearly $6 trillion in market losses last week.

Europe also weighed in, with EUROSTOXX 50 futures down 3.0%, FTSE futures down 2.7% and DAX futures down 3.5%.

Japan’s Nikkei fell 6%, hitting lows last seen in late 2023, while South Korea’s Open New Tab fell 5%. MSCI’s broadest index of Asia-Pacific shares outside Japan, Open New Tab, Open New Tab.

As markets waited to see if Beijing would respond with more stimulus, Chinese blue chips, opens a new tab, fell 4.4%. Taiwan’s main index, which was closed on Thursday and Friday, fell nearly 10%, opens a new tab, leading policymakers to crack down on short selling.

The gloomy outlook for global growth put oil prices under pressure after sharp losses last week.

Brent fell $1.35 a barrel to $64.23, while U.S. crude fell $1.395 a barrel to $60.60.

The flight to safety fell 8 basis points to 3.916%, with the 10-year Treasury yield falling 10 basis points, and fed funds futures rose on the back of an additional quarter-point rate cut by the Federal Reserve this year.

Despite Chairman Jerome Powell saying on Friday that the central bank was in no hurry to raise rates, markets indicated there was about a 56% chance the Fed could cut in May.

The lopsided turn in safety sent the Japanese yen down another 0.4% to 146.26 yen, while the euro was steady at $1.0961. The dollar fell 0.6% against the Swiss franc, and the trade-weighted Australian dollar fell another 0.4%.
Investors also predicted that the imminent threat of a recession would outweigh the potential for inflation to rise from the tariffs.
U.S. consumer price data due later this week is expected to show another 0.3% increase for March, but analysts assume it’s only a matter of time before tariffs on everything from food to cars lead to a sharp rise in prices.
Rising costs will put pressure on company profit margins during upcoming quarterly earnings calls, which some major banks are due to report on Friday. About 87% of U.S. companies will report between April 11 and May 9.
“We expect companies to provide below-average forward guidance for both the second quarter and full year of 2025 during upcoming quarterly earnings calls,” analysts at Goldman Sachs said in a note.
“The rise in tariff rates in the coming quarters will force many companies to raise prices or accept lower profit margins,” they warned. “We expect negative revisions to consensus profit margin estimates in the coming quarters.”
Gold also got swept up in the sell-off, down 0.3% to $3,026 an ounce.

The decline left traders wondering whether investors would take profits where they could and cover margin calls on other assets. It could become a self-fulfilling fire sale.