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Stocks dropped for a second day as investor concern mounted over the health of the global economy amid President Donald Trump’s erratic tariff regime and fears of a US slowdown.

Chinese, Japanese and Australian stock markets all fell on Tuesday. Japan’s Topix and exporter-oriented Nikkei 225 index shed 1.5 and 1 per cent respectively. South Korea’s Kospi dropped 1.1 per cent and Australia’s S&P/ASX 200 declined 0.9 per cent.

On Monday, the US market saw significant falls, with the Nasdaq Composite down 4 per cent — its worst day in two and a half years — while the S&P 500 index tumbled 2.7 per cent over fears of the economic impact of Trump’s global trade war.

“The whole narrative of US exceptionalism has started to change. Europe is up, the US is down. China is up”, said Wei Li, head of multi-asset investments at BNP Paribas China, referring to signs of an end to US stock market outperformance.

Chinese and Hong Kong equities dropped sharply in early trading but later pared back losses. The CSI 300 index was down 0.6 per cent, while Hong Kong’s Hang Seng index shed 1 per cent.

Technology and industrial companies led the falls in Asia, with Taiwan’s contract manufacturers TSMC and Foxconn down 2.7 per cent and 2 per cent. Korea’s Samsung Heavy Industries retreated 2.4 per cent while Japanese chipmaking equipment manufacturer Disco fell 0.3 per cent.

“It was a massive de-risk [session] in the US,” said Tommie Fang, head of China global markets at UBS. The impact on Chinese markets would be lessened by local investor money waiting for opportunities to buy the dip, he added.

“It will be a volatile market globally this year, with Trump and [presidential adviser Elon Musk’s] daily news hitting headlines,” Fang added.

Futures markets pointed to a small recovery in the US and Europe, with contracts tracking the S&P 500 up 0.2 per cent, while those for the Stoxx Europe 600 were up 0.1 per cent and the Dax were up 0.3 per cent.

Other analysts noted US tech stocks had rallied hard over the past year, leading some investors to take profit.

“The whole [US] tech sector has risen so much since last April, even with the correction now, it has still rallied a lot,” said Wee Khoon Chong, a senior markets strategist at BNY.

“People worry this is going to be a meltdown, but I don’t think so,” he added.

The rising appeal of Chinese technology companies in the wake of startling artificial intelligence advances by start-up DeepSeek has forced investors to reassess US tech companies’ high valuations, he added.

“When you have a new, better option, people adjust, valuations adjust,” Chong said.

Investors piled into US Treasuries on Tuesday, with yields on two-year and 10-year bonds falling 0.04 percentage points and 0.08 percentage points, respectively.

The US dollar was flat against a basket of six trading partners and is down 4.6 per cent since the start of the year. The Japanese yen rallied before paring gains to ¥147.3 a dollar and the Swiss franc was up 0.1 per cent to SFr0.88.

Oil was flat, with Brent futures, the international benchmark, trading at $69.35 per barrel. Prices fell 1.5 per cent on Monday during the US session amid rising uncertainty over global demand.

Gold rose 0.2 per cent to $2895 per troy ounce.