Markets stumble as China hits back in trade war
HONG KONG: Asian markets extended a global sell-off yesterday following hefty losses on Wall Street that came in response to China’s hike in tariffs on US$60 billion of US imports, ramping up tensions in a trade war between the global economic titans.
The move by Beijing was followed by a warning of further action such as dumping US Treasuries and came days after Washington more than doubled levies on US$200 billion of Chinese goods and Donald Trump said he was looking at more than US$300 billion more.
The stand-off has sent shockwaves through trading floors, where most dealers had a little over a week ago been confident the two sides were close to a deal.
World markets have rallied for most of the year on the back of optimism about an agreement.
Hong Kong led losses as the market reopened after a long weekend. The Hang Seng Index sank 1.5 per cent while Shanghai shed 0.7 per cent and Tokyo ended down 0.6 per cent, marking its seventh straight loss.
Sydney and Singapore each dropped 0.9 per cent, with Manila and Jakarta both down 1.4 per cent.
There were also losses in Taipei and Wellington, though Seoul edged up slightly.
In early trade London rose 0.5 per cent, Paris added 0.8 per cent and Frankfurt gained 0.4 per cent.
“Uncertainty and short-term sentiment impact is likely to stay,” Medha Samant, director of investment at Fidelity International, told Bloomberg TV. “In the short term, it looks like volatility is here to stay and we could see this risk-off, risk-on going on for a long time.”
The retreat came after the Nasdaq on Wall Street suffered its worst day of 2019 and the Dow ended at its lowest point in more than three months.
After announcing the higher tariffs, the editor of Communist Party-owned Chinese newspaper Global Times warned Beijing could also hit the US by offloading Treasuries, ending US agricultural purchases and reducing orders for Boeing airplanes.
OANDA senior market analyst Jeffrey Halley warned there could be worse to come.
“Given that equity markets are so far behind the curve in repricing the risk to the newworld reality, equities could be in for an extended period of pain,” he said in a note.
However, while there is a lot of fear about an all-out trade war, which could batter the world economy, both said talks will continue, though no date has been set for the next round. — AFP