Asian stocks down for third session as trade, EM worries persist

TOKYO: Asian stocks dropped for the third consecutive session on Monday, hit by worries over further escalation of the US-China trade war and unstable emerging market currencies.

MSCI’s broadest index of AsiaPacific shares outside Japan fell 0.7 per cent while Japan’s Nikkei shed 0.6 per cent though trade could be subdued due to a US market holiday on Monday.

Most European shares are expected to fall with futures in Germany’s DAX and France’s CAC falling about 0.2 per cent. Britain’s FTSE futures bucked the trend to rise 0.15 per cent.

“It looks almost certain that (US President Donald) Trump will impose 25 per cent tariffs on US$200 billion worth of imports from China,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Trump said last week he was ready to implement the new tariffs as soon as a public comment period on the plan ends on Thursday, which would be a major escalation given the United States has already applied tariffs on US$50 billion of exports from China.

Shanghai shares, which fell 5.3 per cent last month on trade war worries, dropped 0.9 per cent to 2,700, edging back at the 2 1/2-year low of 2,653 set two weeks ago.

“The markets tend to think ahead. After the tariffs on US$200 billion of Chinese exports, they will worry what can come next. Unless the trade war anxiety is dispelled, you cannot rule out the possibility of shares falling further,” said Shenshen Wan, strategist at Tokai Tokyo Research.

On the other hand, US stocks – especially technology shares – have fared better, thanks in part to the strength of current economic data and corporate profits.

The Nasdaq index rose 5.7 per cent last month, with Apple gaining almost 20 per cent, the biggest percentage gains since April 2009.

Major economic US data due this week, such as a manufacturing survey on Tuesday and an employment report on Friday, is also expected to show solid conditions, possibly underpinning Wall Street shares – at least for now.