ZCZC
BCN-37
ASIA-MARKETS-UPDATE
Asia markets slump on tariff worries
HONG KONG, Aug 2, 2019 (BSS/AFP) – Asian markets fell sharply Friday as US
President Donald Trump’s decision to slap new tariffs on China ratcheted up
investor fears over the trade war between the world’s top two economies.
The losses in Asia followed a broad-based sell-off on Wall Street, where
the Dow finished 1.1 percent lower on Thursday, losing more than 400 points
following Trump’s announcement that Washington would impose 10 percent in
tariffs on another $300 billion in Chinese goods.
The decision came just as US markets were rallying on the back of the
Federal Reserve’s decision Wednesday to cut interest rates for the first time
in more than a decade.
“The 10 percent is… for a short-term period and then I can always do
much more or I can do less, depending on what happens with respect to a
deal,” Trump said at the White House, adding, “it could be lifted up to well
beyond 25 percent.”
The announcement means virtually all of the $660 million in annual trade
of goods between the world’s two biggest economies will have tariffs on them,
with the new duties set to take effect September 1.
The US decision came after trade negotiators held talks in Shanghai this
week, the first face-to-face discussions since Trump and Chinese President Xi
Jinping agreed to a truce in June.
China warned Friday it would take “countermeasures” if the US followed
through on its threat, with the commerce ministry calling the decision a
“serious violation” of the June truce.
Negotiators are expected to reconvene in Washington in early September for
another round of talks.
On Thursday Trump told reporters he was “not concerned… at all” by the
negative reaction among investors, saying he had anticipated it.
“Trump sent the market in a tailspin,” said Alfonso Esparza, senior market
analyst at OANDA.
“So far, the US consumer has been spared from the tariffs on Chinese
goods, but as Trump’s threats grow in scope, so does the potential impact
(as) higher costs will have to be passed down from American companies”, he
added.
– ‘Trade frictions’ –
Hong Kong lost 2.4 percent, while Tokyo declined 2.1 percent and Shanghai
fell 1.4 percent. Taipei and Seoul also finished down.
European stock markets also tumbled in early trade, with London falling
1.5 percent, while Frankfurt slumped 2.2 percent and Paris was down 2.3
percent.
“Selling will likely lead trade”, Okasan Online Securities said in a note.
“There are fresh signs that US-China trade frictions are worsening again”
while investors are likely to stay away from buying ahead of the weekend, it
added.
Tit-for-tat moves by Japan and South Korea to rescind each other’s
favoured export partner status added to the trade jitters, as the US allies
spar over a long-running dispute on forced labour during World War II.
A string of South Korean court rulings ordering Japanese companies to
compensate forced labour victims has infuriated Japan, which argues the issue
was resolved when the two countries normalised ties.
The latest measures come after Tokyo last month tightened the rules on
exports of three products key to South Korea’s chip and smartphone
industries, raising fears for global supply in the sectors.
Oil prices made a cautious recovery after suffering a rout Thursday as
Trump’s tariffs announcement fuelled concerns about lower demand, sending
Brent plunging seven percent and WTI plummeting 7.9 percent, its worst
decline in a session since February 2015.
– Key figures around 0800 GMT –
Tokyo – Nikkei 225: DOWN 2.1 percent at 21,087.16 (close)
Hong Kong – Hang Seng: DOWN 2.4 percent at 26,918.58 (close)
Shanghai – Composite: DOWN 1.4 percent at 2,867.84 (close)
London – FTSE 100: DOWN 1.7 percent at 7,455.58
Pound/dollar: DOWN at $1.2130 from $1.2140 at 2100 GMT
Euro/dollar: UP at $1.1108 from $1.1090
Dollar/yen: DOWN at 106.85 yen from 107.40
Brent North Sea crude: UP $1.22 at $61.72 per barrel
West Texas Intermediate: UP 88 cents at $54.83 per barrel
New York – Dow: DOWN 1.1 percent at 26,583.42 (close)
BSS/AFP/HR/1452