Asian stock markets plunged in early trading Monday as trade negotiations between the U.S. and China appeared to be on the verge of collapse.
Early Sunday, President Donald Trump tweeted that he would raise tariffs on $200 billion of Chinese goods from 10% to 25% this week, apparently taking Chinese officials by surprise. In response, China may withdraw from the next round of trade talks scheduled to begin Wednesday in Washington. U.S. officials had indicated progress had been made at talks last week in Beijing, and said it was possible a deal could be reached by the end of this week.
But the sudden hard line by Trump spooked investors. U.S. stock market futures sank, with Dow Jones Industrial Average futures
, S&P 500 futures
and Nasdaq Composite futures
all falling around 2% by Sunday night.
Hong Kong’s Hang Seng Index
dropped 3.7% Monday morning. The Shanghai Composite
fell 5.1% and the smaller-cap Shenzhen Composite
plunged about 6%. Australia’s S&P/ASX 200
was down 1.1%, and benchmark indexes in Taiwan
declined as well. Japan’s Nikkei and South Korea’s Kospi were closed for holidays.
Losses were spread across all sectors in Hong Kong, with Geely Automotive
, food processor WH Group
and Apple supplier AAC Technologies
among the biggest decliners. CSPC Pharmaceutical
and China Life Insurance
also sank. Apple manufacturer Foxconn
and Taiwan Semiconductor
dropped in Taiwan. In Australia, Beach Energy
and Westpac Banking
“Arguably, Trump’s threat to lift tariffs ‘shortly’ if Beijing does not play ball on U.S. trade demands, may be more a negotiations tactics than an imminent trade action,” Mizuho Bank said in a commentary. “Nonetheless, Trump’s tweet allusions to tariffs being ‘partially responsible for … great (U.S.) economic results’ does raise the threat of misguided trade policy” from the U.S, it said.
After posting a second straight losing week Friday, crude oil prices continued to fall Monday. U.S.-based West Texas Intermediate crude for June delivery
was down more than 2% and global benchmark July Brent crude
fell by almost as much.
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