Business / Financial Markets

Stocks across Asia slide as Trump reloads tariff bazooka aimed at China

Bloomberg

Stocks in Asia declined with U.S. equity futures after the Trump administration released the biggest list yet of Chinese goods it may hit with tariff increases¥. The climbed with Treasuries, while the Aussie and kiwi retreated.

The offshore yuan retreated by the most in more than a week, bringing to an end recent signs of stability, as the proposed list of $200 billion of Chinese imports was released. Stocks in Tokyo and Seoul were lower as futures on the S&P 500 Index tumbled, ending the positive tone to equities enjoyed at the start of the week thanks to optimism about the corporate-earnings season.

“This latest story will serve as a reality check for the market, reminding investors to reconsider how aggressive they want to be,” said Michael O’Rourke, chief market strategist at JonesTrading. “Regardless, the $200 billion in potential additional tariffs is not a surprise. The president made everyone well aware of them.”

The escalating trade war between the world’s two biggest economies has hit Chinese and Asian equities harder than American ones, with the latest news setting the tone for a volatile Wednesday in Asia. The next risk is retaliation threats from China. Still, investors are hoping a bumper corporate earnings season can boost sentiment, with expectations that strong results can complement a recent run of positive economic data and overshadow growth concerns stemming from the trade tensions.

“In the short run it’s very difficult to see what’s going to bring an end to this escalation of tit-for-tat,” Richard Turnill, chief investment strategist at BlackRock Inc., told Bloomberg TV in Hong Kong. “It’s those increasing concerns that are going to weigh on market returns and force investors increasingly to look for more resilience in their portfolios.”

Elsewhere, oil slipped below $74 a barrel, even as an industry report was said to show shrinking U.S. crude stockpiles.

These are some events to look out for this week:

Earnings season gets going with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.

The most noteworthy U.S. data may be the June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up. There’s another deluge of Treasury debt sales too, with a total $156 billion of notes and bills offered.

Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.

Here are the main market moves:

Stocks

Futures on the S&P 500 fell 0.8 percent. The underlying gauge earlier closed 0.4 percent higher on Tuesday.

Japan’s Topix index dropped 1 percent as of 9:27 a.m. in Tokyo.

Australia’s S&P/ASX 200 Index fell 0.3 percent.

South Korea’s Kospi dropped 1.1 percent.

Currencies

The yen rose 0.1 percent to 110.90 per dollar, compared with 111.27 before the tariff report came out.

The offshore yuan fell 0.4 percent to 6.67 per dollar.

The euro fell 0.1 percent to $1.1732.

The Aussie was down 0.5 percent at 74.20 U.S. cents.

Bonds

The yield on 10-year Treasuries slipped two basis points to 2.83 percent.

Australian 10-year government bond yields dropped two basis points to 2.61 percent.

Commodities

West Texas Intermediate crude slid 0.4 percent to $73.85 a barrel.

Gold advanced 0.1 percent to $1,256.42 an ounce.