Asian stocks fell on Monday after President Donald Trump last week doubled tariffs on steel and aluminum, and accused China of violating last month’s agreement to slash tit-for-tat levies.
Asian markets sank Monday as investors brushed off data showing the Federal Reserve’s favoured inflation gauge cooled more than expected last month, with fears about the impact of the tariffs on the economy back in focus.
Hong Kong dropped more than two per cent, with property firms taking a heavy hit on worries over the future of New World Development after it deferred interest payments on some bonds.
The firm is in the middle of a loan refinancing drive as it looks to raise more than US$11 billion from banks.
Its struggles have revived fears about China’s property sector as companies struggle to sell stock to help pay off their bulging debts.
Tokyo, Sydney, Singapore, Taipei, Manila, and Jakarta also fell, with Shanghai closed for a holiday, AFP reports.
Oil prices surged after OPEC and other key producers hiked output for July, however, less than expected, while geopolitical fears were ramped up after Ukraine hit air bases deep inside Russia, raising concerns over an escalation of the three-year war.
The dollar also retreated on concerns about the US economy as Trump continues to push a bill to extend tax cuts and slash welfare spending, which observers say will add trillions to the already gargantuan national debt.
That has sent shivers through the treasury market, with yields pushing higher as investors seek out better returns for lending the government money.
Worries about US debt led Moody’s to lower the United States’ top-ranking credit rating, warning it expects US federal deficits to widen dramatically over the next decade.
Trump said Friday he would jack up steel and aluminium to 50 per cent, from 25 per cent, which he said “will even further secure the steel industry”.
He also claimed Beijing had “totally violated” last month’s agreement with China to cut eye-watering tariffs for 90 days to hammer out a broader package.
Later, Commerce Secretary, Howard Lutnick, told Fox News Sunday that Beijing had been “slow-rolling the deal”.
Chinese officials accused Washington of making “bogus charges and unreasonably accusing China of violating the consensus, which is seriously contrary to the facts”.
Still, Treasury Secretary, Scott Bessent, who last week warned that negotiations with China were “a bit stalled,” said the US leader could speak with his Chinese counterpart, Xi Jinping,” very soon” in talks that could help break the impasse.
An appeals court granted the levies a stay of execution on Thursday; however, analysts say the wrangle could drag on, causing further uncertainty.
The developments have thrown the trade war back into the spotlight, having been put on the back burner after the China detente and indications that governments were working on deals with US officials.
Key Figures At About 0230 GMT
Tokyo – Nikkei 225: DOWN 1.5 per cent at 37,414.02 (break)
Hong Kong – Hang Seng Index: DOWN 2.3 per cent at 22,753.81
Shanghai – Composite: Closed for a holiday
Euro/dollar : UP at $1.1370 from $1.1349 on Friday
Pound/dollar: UP at $1.3493 from $1.3463
Dollar/yen: DOWN at 143.50 yen from 143.97 yen
Euro/pound: DOWN at 84.26 pence from 84.30 pence
West Texas Intermediate: UP 2.8 per cent at $62.50 per barrel
Brent North Sea Crude: UP 2.5 per cent at $64.34 per barrel
New York – Dow: UP 0.1 per cent at 42,270.07 points (close)
London – FTSE 100: UP 0.6 per cent at 8,772.38 (close)
