China’s Stock Market Sees Worst Crash Since 2008

On April 7, 2025, the Chinese stock market experienced its worst single-day crash since the 2008 Global Financial Crisis, with a decline of over 12%. Concurrently, the Hong Kong stock market saw a significant drop of 13.2%, marking its largest one-day decline since 1997. Other global markets also experienced declines, with varying degrees of severity across countries such as Taiwan, Japan, Italy, and Singapore.

Stock markets today

Hong Kong: -13.6%
Taiwan: -9.6%
Japan: -9.5%
Italy: -8.4%
Singapore: -8%
Sweden: -7%
China: -7%
Switzerland: -7%
Germany: -6.8%
Spain: -6.4%
Netherlands: -6.2%
Australia: -6.2%
France: -6.1%
UK: -5.2%
Malaysia:…

— The Spectator Index (@spectatorindex) April 7, 2025

The London stock market dropped even further just minutes later by 6.1 per cent, before rebounding slightly a few hours later.

The pan-European STOXX 600 slumped 5.8 per cent upon opening on Monday morning.

The US stock market took a dive but I think it’s a knee jerk response to the good for America tariffs. As Tyler Durden points pout, “the market has “crashed,” as people have been saying in the media and on television — but in reality the average price-to-earnings ratio of the S&P 500 right now, 25.1x, is still about 40% higher than the historical average of 16.1x.

That’s not the historical low — it’s the historical average.

That means that despite this “Armageddon,” stocks are still really expensive compared to where they have traded throughout the course of history.

The Dow Jones is trading at about 38,000 — where it was almost one year ago to the day. It’s still up 82% over the last 5 years.”

QTR: The February trade deficit came in at -$123B which was the second largest on record only behind the January trade deficit of -$131B. This surge is driven by people trying to get products into the US before tariffs are enacted.

Once the tariffs go into effect, we are likely to see a big contraction in the trade deficit. Not only have we made advance purchases on goods with the recent surge, but the tariffs will make foreign goods more expensive, denting demand.

On the other hand, the economic underpinnings of China’s economy are not strong.

President Trump stood by his wide-scale tariffs, calling them a “beautiful thing to behold” that will eventually be largely supported even as the stock futures dropped Sunday evening.

“They are already in effect, and a beautiful thing to behold. The Surplus with these Countries has grown during the ‘Presidency’ of Sleepy Joe Biden,” Trump blasted out on Truth Social Sunday night as he attempted to justify the action he took against around 90 nations last week.

“We are going to reverse it, and reverse it QUICKLY. Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!” (NYP)

“But I said we’re not gonna have deficits with your country. We’re not gonna do that because to me a deficit is a loss. We’re gonna have surpluses or we’re at worst gonna be breaking even.”

Despite the commander-in-chief’s optimism, investors weren’t convinced.

Stock futures dropped Sunday evening with the Dow Jones Industrial Average down 2.1% and the S&P 500 plummeting about 2.5% while the Nasdaq fell almost 3.1%.

Asian shares also sharply fell, with Tokyo’s 225 index losing about 8% when the market opened and down 6% by midday. Hong Kong’s Hang Seng fell 9.4% and the Shanghai Composite index lost 6.2%.

The president insisted he doesn’t want stocks to decline, but “sometimes you have to take medicine to fix something.”

“We have been treated so badly by other countries because we had stupid leadership that allowed this to happen,” Trump said. “They took our business, they took our money, they took our jobs.”

More from QTR:

this sell off was gonna happen one way or the other. With rates where they are now, it was a mathematical certainty that the economy was going to slow and that the market would eventually have to correct. There’s no mystery as to why Warren Buffett raised his cash pile to $330 billion just two months ago. He did it because the market was, on any historical valuation metric possible, extraordinarily overvalued.

The Shiller price-to-earnings ratio was at its third highest level in recorded history, second only to right before the housing crisis and right before the 2000s tech bubble.

To the layperson, this means that going into this tariff announcement, stocks were almost the most aggressively valued they have ever been in history.

And so President Trump comes along with his tariff strategy and pricks the bubble that was going to burst relatively soon anyway, and people react to the bubble bursting — not the effects of his policy…..