Trump's new tariff threat causes collective slump in Asian stock markets; South Korea's KOSPI index plunges 3%, gold and silver pull back.

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Trump's announcement of a new round of tariffs has once again shaken global markets.

According to CCTV News, on September 25 local time, U.S. President Trump announced on his social media "Truth Social" that starting October 1, the United States will implement a new round of high tariffs on various imported products. The measures include a 50% tariff on kitchen cabinets, bathroom vanities and related building materials, a 30% tariff on imported furniture, and a 100% tariff hike on patented and branded pharmaceuticals. In addition, Trump also announced that starting October 1, all imported heavy trucks will face an additional 25% tariff.

This sudden news quickly triggered risk-off sentiment in the markets. On Friday, major Asian stock indices fell broadly, with Japanese and South Korean markets leading the declines, and relevant pharmaceutical company stock prices plunging sharply.

Meanwhile, investors are still digesting strong economic data that may affect the Federal Reserve's path for interest rate cuts. The new tariff threat has further increased uncertainty in an already tense market environment, and investors are closely watching the upcoming inflation report for clues about the future direction of interest rates.

The Nikkei 225 Index fell about 0.6% to 45,478 points. Pharmaceutical stocks fell significantly, with Sumitomo Pharma down 5.2% and Chugai Pharmaceutical down 3.9%. The Korean KOSPI index fell 3% to 3,366.82 points.The U.S. dollar index fell 0.1% to 98.36.The euro rose 0.1% to $1.1680.The U.S. 10-year Treasury yield was little changed, at 4.18%.West Texas Intermediate crude oil rose 0.3% to $64.59 per barrel.Spot gold was little changed at $3,747 per ounce.Spot silver fell 0.97% to $44.75.

Broad Decline in Asian Stock Markets, Japan and South Korea Lead Losses

On Friday, the Nikkei 225 Index in Japan fell about 0.6% to 45,478 points. Directly threatened by the 100% pharmaceutical tariff, Japanese pharmaceutical stocks dropped sharply, with Sumitomo Pharma down 5.2% and Chugai Pharmaceutical down 3.9%.

South Korea's KOSPI Index plummeted 2.5% to 3,384.58 points, marking its third straight day of decline. According to reports, concerns are mounting over the prolonged tariff negotiations with the U.S.

Other markets performed weakly as well, with India's BSE Sensex falling 0.7%. Australia's S&P/ASX 200 index bucked the trend, rising 0.2% and becoming one of the few major markets to register gains.

U.S. Stocks Fall for Third Straight Day, Risk-Off Sentiment Rises

Before Trump made his tariff remarks, Wall Street had already closed lower for three consecutive days.

The recent weakness in U.S. stocks is mainly due to stronger-than-expected economic data. Reports indicate the U.S. economy may be stronger than economists anticipated, which, although positive for employment, also reduces the likelihood of multiple Federal Reserve rate cuts in the coming months. The Fed just enacted its first rate cut of the year last week, but the robust economic performance is causing the market to question the extent of further monetary easing. Since this year's rally in U.S. stocks is largely built on expectations of rate cuts, if cuts fall short of expectations, criticism about overvalued markets will grow.

Stephen Innes of SPI Asset Management wrote in a commentary:

"For traders in today's Asian markets, waking up to find that market gravity has returned. After a $15 trillion global stock rally so far this year, with yields rising for the 'right reasons' (i.e. stronger growth), the gains now feel a bit excessive."

He added that in such a "rarefied atmosphere," market enthusiasm can easily be shaken.

Reflecting market sentiment, the U.S. 10-year Treasury yield edged up from 4.16% to 4.17%, indicating traders are reducing bets on future Fed rate cuts.

Oil Prices Rise Against the Trend, Geopolitical Factors Brew

While global stock markets are generally under pressure, oil prices rose against the trend and are on track for their largest weekly gain in more than three months. On Friday, Brent crude futures rose to $69.67 per barrel, while West Texas Intermediate crude oil rose 0.3% to $64.59 per barrel.

The increase in oil prices is mainly driven by rising geopolitical tensions. In addition, an unexpected drop in U.S. crude inventories last week provided extra support for prices. These factors combined pushed the two main oil benchmarks to their highest levels since August 1 this week.

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