Stock markets roiled as US ups ante in trade war “
TOKYO A sell-off in Chinese markets knocked Asian stocks yesterday as US threats of tariffs on an additional US$200 billion worth of Chinese goods pushed the worlds two biggest economies ever closer to a full-scale trade war.
Washington proposed the extra tariffs after efforts to negotiate a solution to the dispute failed to reach an agreement, senior administration officials said on Tuesday.
The US had just imposed tariffs on $34 billion worth of Chinese goods on Friday, drawing immediate retaliatory duties from Beijing on US imports in the first shots of a heated trade war. US President Donald Trump had warned then that his country may ultimately impose tariffs on more than $500 billion worth of Chinese imports - roughly the total amount of US imports from China last year.
With no early end appearing to be in sight for the escalating tit-for-tat world trade frictions and rising trade protectionism, global trade wars have become one of the key downside risks to world growth and trade in the second half of 2018 and for 2019, wrote Rajiv Biswas, Asia Pacific chief economist at IHS Markit.
MSCIs broadest index of AsiaPacific shares outside Japan fell 1.1 per cent. The index had gained for the past two sessions, having enjoyed a lull from the trade war fears that lashed global markets last week.
Spreadbetters expected the Asian gloom to extend to European stocks, with Britains FTSE tipped to open down 0.45 per cent, Germanys DAX 0.6 per cent and Frances CAC 0.5 per cent.
With no early end appearing to be in sight for the escalating tit-for-tat world trade frictions and rising trade protectionism, global trade wars have become one of the key downside risks to world growth and trade in the second half of 2018 and for 2019. RAJIV BISWAS ASIA PACIFIC CHIEF ECONOMIST IHS MARKIT
Hong Kongs Hang Seng slid 1.5 per cent and the Shanghai Composite Index dropped 1.8 per cent.
S&P 500 and Dow futures were down 0.7 per cent and 0.75 per cent, respectively, pointing to a lower open for Wall Street later in the day.
South Koreas KOSPI lost 0.55 per cent and Japans Nikkei fell 1 per cent.
The markets still remain sensitive to the trade-related theme, which is something investors have to take into account for the long term, said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.
At the same time, the trade dispute can easily be blamed for a variety of ills. But it could mask over factors that could also weigh on equities in the longer run, such as tighter monetary policies led by the US.
Investors worry a full-blown Sino-US trade conflict could hurt global exports, investment and growth.
The yen, often sought in times of political tensions and market turmoil, gained against a number of peers.
The dollar traded at 111.02 yen, pulled back from a near twomonth peak of 111.355.
The euro fell 0.2 per cent to 130.175 yen and the Australian dollar lost 0.7 per cent to 82.24 yen.
The Aussie, considered a liquid proxy for China-related trades, fell 0.7 per cent against the dollar to $0.7408.
Chinas yuan lost 0.45 per cent against the dollar and back toward an 11-month low plumbed last week.
The 10-year Treasury note yield fell 3 basis points to 2.84 per cent, pulling back sharply from a one-week peak of 2.875 per cent scaled the previous day.
Oil prices declined after the US said it would consider requests from some countries to be exempted from sanctions it will put into effect in November that pre- vents Iran from exporting oil.
Brent crude futures lost 0.8 per cent to $78.22 a barrel. Oil had risen the previous day, supported by a larger-than expected US stock draw and supply concerns in Norway and Libya.
Industrial metals sank with the trade war threatening global growth.
Copper on the London Metal Exchange (LME) sank roughly 3 per cent to brush $6,092.50 per ton, lowest since July 2017, before pulling back a little to $6,165.00.
LME zinc fell as much as 4.8 per cent to $2,503 per tonne, its lowest since June 2017. REUTERS