Asian markets suffer fresh losses on trade war fears

HONG KONG: Asian markets extended last week’s worldwide plunge as investors fret that Donald Trump’s controversial tariffs on US$ 60 billion of Chinese goods will spark a trade war that would hammer the global economy.

The US move to impose levies, claiming China is breaching intellectual property rights, sparked a rout of equities across the world, while China warned it was “not afraid of a trade war”.

US Treasury Secretary Steve Mnuchin said at the weekend that Trump was not ready to back down but added that he had “very productive conversations” with Chinese officials on the issue.

Trump’s announcement came weeks after he unveiled tariffs on theimportofsteelandaluminium products as he presses on with his “America First” protectionist programme.

Beijing did not rule out cutting back its purchases of US Treasuries, which are crucial to keep the wheels of the world’s top economy greased. China is the biggest buyer of Treasuries.

Wall Street’s three main indexes tumbled for a second successive day on Friday, and Asian investors – who fled to the hills last week – continued to sell on Monday.

“How China escalates will determine the pace of play, but Chinese retaliation so far has been more genial than initially thought, and they have made efforts for a diplomatic solution,” said Stephen Innes, head of AsiaPacific trading at OANDA.

“Although China is willing to negotiate and is likely to offer compromises, uncertainty and the fear of escalation will likely hold back market sentiment in the short run.”

Adding to the negat ive sentiment was news that Trump had installed a hardline hawk, John Bolton, as his national security adviser, stoking geopolitical worries.

In early trade Hong Kong was down 0.3 per cent, Tokyo went into the break 0.4 per cent lower and Shanghai sank more than one per cent. Singapore fell 0.5 per cent and Sydney gave up 0.6 per cent while Wellington was one per cent off.

Taipei, Manila and Jakarta also fell but Seoul climbed 0.2 per cent as it emerged that South Korea and the United States have reached an understanding on revising their free- trade agreement and on steel tariffs. — AFP