Asian stock markets faced a dramatic sell-off on April 7, 2025, as a global equity rout deepened in response to US President Donald Trump’s refusal to roll back sweeping tariffs. The escalating trade tensions, particularly with China, have sparked fears of a worldwide recession, with Singapore’s Straits Times Index (STI) recording its steepest single-day drop since the 2008 financial crisis. As markets across the region—from Hong Kong to Tokyo—suffered historic losses, analysts warn that sustained tariffs could trigger higher inflation, slower growth, and further volatility.
Historic Losses in Singapore and Beyond
The STI plummeted 8.57 percent, or 328.2 points, to 3,497.66 at the opening of trading on April 7, before closing down 7.5 percent, or 285.36 points. This marked the index’s largest one-day decline since the global financial crisis over a decade ago. Trading volume in Singapore was exceptionally heavy, with $4.2 billion worth of shares changing hands—nearly three times the daily average in February. Across the market, 612 stocks fell while only 137 rose, reflecting widespread investor panic. 
David Gerald, founder and CEO of the Securities Investors Association (Singapore), contextualized the drop, noting that the STI has seen similar sharp declines during past periods of global uncertainty. “The STI experienced a 7.4 percent drop in March 2020 during the Covid-19 pandemic and an 8.3 percent fall in October 2008 during the global financial crisis” he said. He added that if tariffs persist, they could fuel inflation and hinder global growth, potentially leading to further sell-offs.
Bank stocks bore the brunt of the losses across Asia, driven by expectations that central banks, including the US Federal Reserve, might implement sharper rate cuts in response to a looming recession. In Singapore, DBS Bank shares closed down 9.3 percent at $39.28 after an initial plunge of 15.5 percent. UOB dropped 6.3 percent to $33.23, while OCBC Bank fell 6.9 percent to $15.47. The pain was even more acute in Hong Kong, where HSBC shares tumbled 14.8 percent and Standard Chartered sank 17.5 percent.
Regionally, Hong Kong’s Hang Seng Index recorded the heaviest loss, closing down 13.2 percent—its worst drop since the 1997 Asian financial crisis. China’s Shanghai Index fell 7.8 percent, its largest single-day decline since February 2020. Japan’s Nikkei Index slid 7.8 percent, entering bear market territory with a 23 percent loss from its December peak. Taiwan’s Taiex index suffered a record one-day fall of 9.7 percent, while South Korea’s Kospi index dropped 5.6 percent.
US Tariff Threats Fuel Global Uncertainty
The market turmoil follows President Trump’s announcement on April 7 that he would impose an additional 50 percent tariff on China if Beijing does not retract its retaliatory measures. China had responded to earlier US tariffs with like-for-like measures on April 4, escalating the trade war. Trump also threatened to terminate negotiations, further unsettling investors. Speaking aboard Air Force One on April 6, he dismissed the market chaos, stating “sometimes you have to take medicine to fix something”.
US Commerce Secretary Howard Lutnick reinforced the administration’s stance, telling CBS News on April 6 that the tariffs would not be postponed. “The tariffs are coming… They are definitely going to stay in place for days and weeks” he said. The remarks came as US stock futures pointed to continued losses, with Dow Jones Industrial Average futures falling 1,531 points, or 4 percent. S&P 500 and Nasdaq futures also shed 4 percent each, signaling another brutal trading session ahead.
Analysts have raised alarms about the broader economic fallout. JPMorgan Chase & Co. chief economist Bruce Kasman estimated a 60 percent chance of a US-led global recession in 2025 due to the tariffs. Goldman Sachs, meanwhile, increased its recession probability for the US within the next 12 months to 45 percent, up from 35 percent. Chetan Seth, an analyst at Nomura, advised investors to adopt a defensive stance on Asian stocks outside Japan unless US policy shifts. “Our sense is that the fundamental impact of tariffs and a US slowdown is yet to come as tariffs weigh on hard data such as inflation, labor markets, consumption, and corporate earnings over the next few weeks and months” he said.
Impact on Singapore’s Economy and Currency
The Singapore dollar weakened by 0.2 percent to 1.3488 per US dollar on April 7, though it remains 0.8 percent stronger against the greenback year-to-date. Other regional currencies hit harder by tariffs fared worse, with the Malaysian ringgit falling 0.7 percent and the South Korean won dropping 0.6 percent. Taimur Baig, chief economist at DBS, suggested that the Monetary Authority of Singapore (MAS) might slow the pace of the Singapore dollar’s trade-weighted appreciation at its next policy meeting on April 14 to cushion the economy. A weaker currency could help mitigate the price impact of tariffs on Singapore’s exports.
Baig also projected a direct negative impact of 0.5 to 0.75 percentage points on Singapore’s 2025 GDP growth forecast of 2.8 percent. He cautioned that if the US imposes additional tariffs of up to 25 percent on semiconductor and pharmaceutical imports—key sectors for Singapore—the economic hit could be far greater. Other Asian central banks may also ease monetary policy by cutting interest rates to support growth amid the downturn.
Broader Market and Commodity Fallout
The tariff-driven uncertainty rippled through commodity markets as well. US crude oil prices fell below $60 per barrel for the first time since April 2021, with Brent crude dropping $2.05 to $63.53 per barrel and US crude diving $2.07 to $59.92 per barrel. Analysts attribute the decline to fears that higher business costs from tariffs will dampen oil demand. Even gold, typically a safe-haven asset, lost 0.7 percent to settle at $3,013 per ounce, as investors reportedly sold off holdings to cover losses and margin calls elsewhere.
Despite the volatility, some market observers in Singapore remain cautiously optimistic. S. Nallakaruppan, president of the Society of Remisiers (Singapore), noted that while the STI sell-off was steep, there was less panic compared to past crises like the 2008 financial crisis or the 2020 pandemic. He attributed morning panic-selling to algorithmic trading and suggested that investors are now “more savvy” having witnessed market plunges and recoveries before. Nallakaruppan added that the market will remain volatile, though he could not predict a bottom.
For long-term investors, he advised focusing on fundamentally strong Singapore stocks with good dividend yields, low price-to-earnings ratios, and solid price-to-book ratios. Government-linked real estate investment trusts with robust balance sheets were also highlighted as potential safe bets. David Kuo, co-founder of The Smart Investor, echoed this sentiment, urging investors to seek out recession-resistant sectors. “In times of recession, look for companies that produce things that people can easily afford or can’t easily do without. Look at consumer staples, banks, supermarkets” he said.
Government Support and Future Outlook
Analysts anticipate that the Singapore government will step in with financial support if the global downturn worsens. Chua Hak Bin, co-head of macro research at Maybank, pointed to the government’s substantial fiscal surplus of $14.3 billion accumulated over the current electoral term. “The government has ample dry powder to introduce more fiscal stimulus in the event of a sharp global downturn” he said, noting that these funds could be deployed in the 2025 financial year without tapping past reserves.
As the US-China trade war intensifies, questions linger over how Singapore and other Asian economies will navigate the fallout. While a weaker currency and potential interest rate cuts may offer short-term relief for exports, the specter of inflation and reduced global demand looms large. If additional tariffs target critical industries like semiconductors, the impact on Singapore’s export-driven economy could be severe. For now, investors and policymakers alike are bracing for further turbulence, with the hope that diplomatic efforts or policy reversals might avert a full-blown recession.
