Asian stocks fall, yen hits 2-month high following Trump tariff worries

Asian share markets fell sharply on Thursday, tracking choppy trading on Wall Street and a dip in European stocks as U.S. President Donald Trump's tariff plans and a cautious stance from Federal Reserve policymakers hurt risk sentiment.

The risk-off mood lifted gold prices to a record high, while safe-haven currencies led by the Japanese yen also firmed on geopolitical worries.

Trump said on Tuesday that sector-wide tariffs on pharmaceuticals and semiconductor chips would start at "25% or higher," rising substantially over the course of a year. He intends to impose similar tariffs on autos as soon as April 2.

That along with other threats has exacerbated fears of a wide-ranging trade war, leaving investors jittery, although some analysts see the moves by Trump as a negotiation tool.

"In general the bias for markets remains upwards but if you look shorter term over the last few days, it's more mixed because the market tends to trade around the latest indications of the Trump administration," said Julian McManus, portfolio manager at Janus Henderson Investors.

"That tends to be unsettling and markets tend to trade off whenever they hear the word tariff because they think it means either risk for a particular country or they think inflation."

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1% in early trading. Japan's Nikkei tab slid 1.4% on the strong yen.

Chinese stocks had a muted start to the session, with the blue-chip index down 0.4%. Hong Kong's Hang Seng Index slid 1.7%, having touched a four-month high earlier this week boosted by a blistering rally in tech stocks.

On Thursday, Hang Seng's tech stocks index fell more than 3%, on course for its worst one-day drop in three months. Still, the index is up nearly 6% so far in February.

Wall Street's main indexes finished higher on Wednesday, with the S&P 500 edging to a second straight closing high after wobbling between green and red throughout the session.

The pan-European STOXX 600 index dropped 0.9%, logging its biggest daily fall since the start of the year.

Trump's initial policy proposals raised concern at the Fed about higher inflation, with firms telling the U.S. central bank they generally expected to raise prices to pass along the cost of import tariffs, according to the Fed's January meeting minutes released on Wednesday.

"Trump's policies ... no doubt added complexity to the Fed's balancing act between inflation and employment, forcing policymakers to lean into a wait-and-see approach," said Yeap Jun Rong, market strategist at IG.

"That said, with market expectations already well aligned for a rate hold over the next two FOMC meetings, the minutes served more as confirmation of existing sentiment."

The yen gained as market jitters escalated on geopolitical worries after Trump denounced Ukrainian President Volodymyr Zelenskiy as a "dictator" amid talks to end the Ukraine war.

The yen hit an over two-month high against the dollar and was last up nearly 0.6% at 150.57 per dollar. The yen has risen more than 4% against the dollar this year boosted by rising odds of the Bank of Japan hiking rates again in 2025.

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, eased 0.1% to 107.07. The euro was steady at $1.0429.

Gold prices rose to a fresh record high of $2,946.85 an ounce on safe-haven demand, reaching a new peak for the ninth time this year. The yellow metal was last at $2,940.63.

Oil prices eased away from a one-week high on worries about supply disruptions in Russia and the U.S., even as the market awaits the outcome of talks to end the war in Ukraine.