Straits Times Index nosedives 7.5% amid renewed fears of a global recession triggered by US tariff threats

Singapore’s stock market experienced its sharpest one-day plunge since the 2008 financial meltdown, with the Straits Times Index (STI) tumbling by 7.5% on 7 April 2025. The drop followed a wider Asian market collapse as concerns grew over fresh global tariffs announced by US President Donald Trump, fuelling fears of a looming worldwide recession.

The STI opened in freefall, shedding 328.2 points—or 8.57%—before slightly recovering to end the day at 3,497.66, a loss of 285.36 points. Over 600 stocks declined, while fewer than 140 registered gains. The day’s turnover surged to S$4.2 billion, nearly triple the average daily volume in February.

David Gerald, president of the Securities Investors Association (Singapore), noted that Singapore’s index has seen dramatic single-day declines during periods of global uncertainty, such as the pandemic in March 2020 and the 2008 financial crash. He warned that persistent tariffs could amplify inflationary pressures and hamper economic growth, increasing global market instability.

Despite the severity of the sell-off, S. Nallakaruppan of the Society of Remisiers observed that investor panic appeared more muted this time. He attributed the sharp morning plunge to algorithmic trades rather than mass retail exits, pointing out that market participants today are more experienced and strategic.

Financial stocks bore the brunt of the fall, with DBS dropping 9.3% to S$39.28 after opening 15.5% lower. UOB closed 6.3% down at S$33.23, and OCBC slipped 6.9% to S$15.47. In Hong Kong, HSBC shares plummeted 14.8%, while Standard Chartered lost 17.5%.

Across Asia, markets took a beating. Hong Kong’s Hang Seng Index posted a devastating 13.2% decline—the worst since the 1997 Asian financial crisis. Shanghai’s composite index fell 7.8%, matching its worst day since the early days of the pandemic. Japan’s Nikkei entered bear market territory, and Taiwan’s Taiex suffered a record-breaking 9.7% loss.

In Europe, Germany’s DAX sank 10% after opening and stabilised with a 6.2% fall. France’s CAC dropped 6.2%, while the UK’s FTSE shed 4.6%.

Amid this turmoil, President Trump doubled down on his tariff stance, threatening to raise duties on Chinese imports by another 50% if China didn’t ease its retaliatory measures. Speaking aboard Air Force One, he dismissed market volatility, saying “sometimes you have to take medicine to fix something”.

US futures signalled further losses, with Dow Jones, Nasdaq and S&P 500 futures all down 4%. US Commerce Secretary Howard Lutnick confirmed the tariffs would remain in place “for days and weeks”. JPMorgan’s chief economist projected a 60% chance of a global recession in 2025 due to these trade frictions.

As safe havens faltered, gold slipped by 0.7% to US$3,013 per ounce, and US crude oil fell below US$60 a barrel for the first time in four years. Brent crude followed suit, dropping US$2.05 to US$63.53.

Singapore’s dollar weakened slightly to 1.3488 against the greenback, though it remains up for the year. The Malaysian ringgit and South Korean won fell further as their economies are heavily exposed to global trade dynamics.

Taimur Baig, chief economist at DBS, expects the Monetary Authority of Singapore to ease its monetary policy further at its upcoming meeting. He estimated that the escalating trade conflict could shave up to 0.75 percentage points off Singapore’s 2025 GDP growth forecast of 2.8%.

If Washington moves forward with tariffs on semiconductors and pharmaceuticals, Baig warned, Singapore could face a significantly greater economic blow.

Analysts suggested that the Singapore Government may introduce targeted support for businesses and households. With a fiscal buffer of S$14.3 billion built up over the current term, the country has ample room to deploy stimulus if needed, according to Maybank’s Chua Hak Bin.

Investment advisors encouraged calm, urging long-term investors to hold fundamentally strong stocks with solid dividends and valuations. Real estate investment trusts linked to the government were also highlighted as resilient options during economic uncertainty.