Zürcher Nachrichten - Japan's Nikkei leads hefty market losses, gold hits record

Equities across the planet have been hammered in recent weeks ahead of Donald Trump's "Liberation Day" on Wednesday, when his administration will unveil a series of levies against friend and foe alike, citing what he says are unfair trading practices.

His announcement last week that he would also impose 25 percent duties on imports of all vehicles and parts ramped up the fear factor on trading floors, hammering car giants including Japan's Toyota, the world's biggest.

Governments around the world have pushed back against Trump's tariffs, and could announce more countermeasures, while Canadian Prime Minister Mark Carney told Trump on Friday that he will implement retaliatory tariffs to protect his country's workers and economy.

Adding to the dour mood was data showing the Federal Reserve's preferred gauge of inflation rose more than expected last month over worries Trump's tariffs will fan price rises and further dent hopes for interest rate cuts.

Markets fell across the board on Monday, with firms in all sectors feeling the pain. Data showing Chinese factory activity grew at the quickest pace in a year in March provided a little optimism over the world's number two economy.

Japan's Nikkei 225 index plunged more than four percent, extending last week's slide, as automakers Toyota, Nissan and Mazda shed between three and four percent, while tech investment titan SoftBank tanked more than five percent.

The index's drop put it in a correction, having fallen more than 10 percent from its peak in December.

Zensho Holdings, which owns several Japanese restaurant franchises, plunged 3.9 percent after its beef bowl chain Sukiya said it would temporarily shut nearly all of its roughly 2,000 branches after a rat was found in a miso soup and a bug in another meal.

Seoul was also sharply lower.

"Within the Asia-Pacific region, the car levies will hit Japan and South Korea the hardest. About six percent of Japan's total exports are cars shipped to the US. In South Korea's case, it's four percent," Moody's Analytics economists wrote.

"Such a sizeable tariff hike will undermine confidence, hit production and reduce orders. Given the long and complex supply chains in car manufacturing, the impact will ripple through these countries' economies.

"Back-of-the-envelope calculations suggest the action could shave 0.2 to 0.5 percentage points from growth in each."

There were also losses in Sydney, Shanghai, Wellington and Taipei.

Hong Kong suffered another big selloff, with conglomerate CK Hutchison shedding 3.1 percent following reports billionaire Li Ka-shing might delay signing a multi-billion-dollar deal to offload its ports operations, including those in the Panama Canal.

The firm has faced criticism from China since it agreed to offload the business to a US-led consortium after pressure from Trump. Beijing confirmed on Friday antitrust regulators will review the deal, likely preventing the parties from signing it as planned on Wednesday.

Bangkok dropped more than one percent as trade got back under way after being suspended on Friday following the deadly quake that hit the Thai capital.

The stock market was already under pressure, having dived more than 15 percent since the turn of the year on worries about the Thai economy.

London, Paris and Frankfurt fell in early trade.

Gold, a safe haven in times of uncertainty and turmoil, hit a record high of $3,127.92.

"Investors have a severe case of nerves ahead of Trump's tariff Liberation Day," said Neil Wilson, an analyst at TipRanks. "The only thing holding up sentiment today is data showing China's factory activity at a one-year high as stimulus measures seem to be having an impact."

The selling followed a hefty selloff on Wall Street, where the Dow tumbled 1.7 percent, the S&P 500 lost 2.0 percent and the Nasdaq dived 2.7 percent.

US investors were jolted by figures showing the core personal consumption expenditures (PCE) index came in above forecasts in February.

Analysts said that while the reading was not a blowout, its timing amid a period of uncertainty added to the sense of gloom when traders had been hoping for a little reassurance.

"Markets will now be fully at the mercy of an impending deluge of tariff-related headlines, while highly reactive to any US economic data that accelerates the thematic of slower economic activity and higher expected inflation," said Chris Weston at Pepperstone.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: DOWN 4.1 percent at 35,617.56 (close)

Hong Kong - Hang Seng Index: DOWN 1.3 percent at 23,119.58 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,335.75 (close)

London - FTSE 100: DOWN 0.9 percent at 8,579.60

Euro/dollar: DOWN at $1.0829 from $1.0838 on Friday

Pound/dollar: UP at $1.2955 from $1.2947

Dollar/yen: DOWN at 149.10 yen from 149.72 yen

Euro/pound: DOWN at 83.58 pence from 83.68 pence

West Texas Intermediate: UP 0.6 percent at $69.76 per barrel

Brent North Sea Crude: UP 0.6 percent at $74.08 per barrel

New York - Dow: DOWN 1.7 percent at 41,583.90 (close)

W.Vogt--NZN