Asian and European stock markets plummeted Monday, as many indexes suffered the worst declines since the 2020 Covid-19 global panic. Japan's Nikkei is down more than 20% from its 2025 peak.
World stock markets that had been outperforming Wall Street this year are now down drastically themselves, and no longer a good alternative for investors.
The Tokyo Nikkei 225 Index plunged 7.83% Monday. Its three-day rout erased 12.85% off the index and left Japan's main stock index 22.32% below its 2025 closing high, according to Dow Jones Market Data. The index peaked in July 2024. A bear market is generally considered to be a decline of more than 20%. Year-to-date, the Nikkei is down 21.95%.
It didn't get much better elsewhere in Asia.
The Shanghai Composite had withstood the global stock market rout, but it slid 7.34% Monday. Mainland China's principal stock benchmark just had its worst one-day and two-day declines since Feb. 3, 2020. Year-to-date, the Shanghai is still holding up better than most major markets, down 7.61%.
That was before President Donald Trump threatened even more tariffs on China Monday morning.
Economist Ed Yardeni said the Trump administration will face pressure from congressional Republicans about the political costs of tariffs, although so far the president is not budging. Is there a way out? Tariffs could be negotiated downward, the economist said.
"Trump really does have an exit ramp here if he wants to take it," Yardeni said in a conference call Monday. He could declare a 90-day freeze, negotiate deals with countries, declare victory and move on.
Worst Rout Since Financial Crisis For Hang Seng
But the Hong Kong Hang Seng Index is down 14.56% over the last three trading days. That's the worst three-day sell-off since October, 2008. Monday's 13.22% plunge was the worst day since Oct. 28, 1997, when the Asian currency crisis ravaged world markets.
The Hang Seng is down more than 40% from its record high on Jan. 26, 2018, but down only 1.15% this year so far.
In South Korea, a big exporter of appliances and electronics into the U.S., the Kospi Composite Index sold off 5.57% Monday. A four-day losing streak has shaved 7.66% off the index. Still, year to date, it is down just 2.97%.
India's BSE Sensex lost 2.95% Monday. A three-day drop of 4.54% is its worst since June, 2022. For the year, it's down 6.4%.
As of Friday's close, the S&P 500 was down 13.7% and the Nasdaq had lopped off 19.3% this year. Both have fallen more than 20% from their peaks.
Europe's 4-Day Skid Worst Since Covid
European stock markets are also suffering their worst days since the Covid bear market.
The STOXX Europe 600 Index lost 5.72% Monday, the worst session since March 12, 2020.
Over the past four sessions, the index is down 13.29%, which is also the worst since March, 2020.
Down 16.9% from its record close in little more than a month, the index is down 7.81% for the year.
London's FTSE 100 slid 4.38%, Germany's DAX fell 4.13% and the Paris CAC 40 lost 4.78% Monday. For all three major European bourses, it's been the worst four-day stretch since March 2020, according to Dow Jones Market Data.
The FTSE 100 has dropped 13.18% from its 2025 closing high, and is down 5.76% for 2025. The DAX trades 15.5% below its 2025 closing high and has erased all gains it had for the year. The CAC 40 is 15.59% off this year's closing high and down 6.15% for the year.
European stock markets rallied earlier this year, as Germany and other governments raised stimulus and defense spending. But the Europe trade, like most others, has fallen apart.
The Select STOXX Europe Aerospace & Defense ETF climbed nearly 50% from Jan. 1 to its peak on March 18. It's fallen 18% since then, most of occurring in a two-day, 13% sell-off. IShares MSCI Europe Financials has seen a nearly 27% rally from the start of 2025 evaporate to less than 7%.
Emerging markets also are falling swiftly. The iShares MSCI Emerging Markets ETF has swooned about 11% since last Thursday's close.
Falling Oil Causes Worry In Russia
In Russia, the Urals crude oil grade — the country's vital export stream — fell to $52.76 a barrel at the Baltic Sea port of Primorsk on Friday, according to data from Argus Media quoted by Bloomberg. It was most recently below $50 a barrel in June 2023.
Russia relies heavily on oil and gas, which accounted for almost 30% of its federal government proceeds in January-February, Bloomberg says. The Kremlin says it's doing all it can to soften the impact of a global oil price sell-off on Russia's economy.
Last week, Brent crude for June delivery slid 9.87% to $65.58 a barrel. It was the worst week for Europe's benchmark crude since October 2023. Through Friday, Brent crude was down 12.14% for the year.
