Asian shares tumbled Monday after the latest escalation in the U.S.-China trade war renewed uncertainties about global economies, as well as questions over what President Donald Trump might say next.Japans benchmark Nikkei 225 started plummeting as soon as trading began and stood at 20,234.87 in the morning session, down 2.
3%. Australias S&P/ASX 200 slipped 1.5% to 6,427.20. South Koreas Kospi lost 1.7% to 1,916.14. Hong Kongs Hang Seng dropped 3.3% to 25,309.37, while the Shanghai Composite was down 1.2% at 2,862.87.Stephen Innes, managing partner at Valour Markets in Singapore, compared the difficulty of assessing the volatile market situation to reading tea leaves.
Nobody understands where the president is coming from, he said, adding that the best thing Trump can do for market stability is to keep quiet.The problem that were faced right now is that we are making a lot of assumptions ahead of the economic realities.The market is now dominated by fears of a portending U.
S. recession, although the American economy is actually holding up, and much of the U.S. economy is made up of consumption, Innes said. If interest rates come down, he added, consumer spending is likely to go up, working as a buffer for the economy.What the markets really waiting for is for them to drop interest rates, Innes said.
Right now, we are still sitting on that uncertainty.The Dow Jones Industrial Average plunged more than 600 points Friday after the latest escalation in the trade war between the U.S. and China rattled investors. The broad sell-off sent the S&P 500 to its fourth straight weekly loss.The tumbling began after Trump responded angrily on Twitter following Chinas announcement of new tariffs on $75 billion in U.
S. goods. In one of his tweets he hereby ordered U.S. companies with operations in China to consider moving them to other countries — including the U.S.Trump also said hed respond directly to the tariffs — and after the market closed he delivered, announcing that the U.S. would increase existing tariffs on $250 billion in Chinese goods to 30% from 25%, and that new tariffs on another $300 billion of imports would be 15% instead of 10%.
Those announcements are likely to influence stock markets in Asia when trading opens there Monday.The ongoing trade dispute between Washington and Beijing, and especially its unpredictability, is certain to have damaging effects on Asia. The unpredictability affects the real decisions central banks make on fiscal policy and companies make on their strategies and investments, setting off ripples of uncertainty.
Zhu Huani of Mizuho Bank in Singapore said what he called Trumps tariff tantrum was setting off the sense that tariffs could continue to rise, with the the unpredictability of timing and extent of these trade actions risk accentuating the paralysis of business decisions and big-ticket business spending.
.No matter which way you cut the cake, it is nearly impossible to construct a bullish, or even neutral scenario for equity.....