Stocks slid at the open in Asia Friday, and US futures dropped, after US President Donald Trump announced a new round of tariff hikes on Chinese imports.
The yen stayed higher after posting its biggest gain in more than two years.
Japanese benchmarks fell more than 1.5% and Korean stocks dropped more than 1% in early trading, while Australian equities saw a more modest retreat.
Trump’s tariff salvo roiled financial markets anew, sending 10-year Treasury yields tumbling through 2% and crude oil down 8% on Thursday.
The S&P 500 saw the biggest two-day drop since May, with the plans for 10% American tariffs on $300 billion of Chinese imports coming a day after some disappointment with the Federal Reserve chief casting doubt about a long cycle of interest-rate cuts. China’s yuan dropped offshore, and Chinese stock futures slumped 3% earlier.
Lenders led losses on US equity benchmarks but the declines spread across sectors as a draft list of $300 billion worth of targets published by the Trump administration in May included a raft of consumer and technology goods, including most of Apple’s major products such the IPhone, along with toys, footwear and clothing. The new tariffs are set to kick in Sept 1. Trump also said the levies could be raised beyond 25%.
“We’re just seeing the beginning of what the market reaction’s going to look like,” given the breadth of the impact of the new tariffs, said Arthur Hogan, chief market strategist at National Securities Corp.
The 10-year Treasury yield dropped to the lowest level since 2016, while two-year rates plunged as much as 18 basis points as traders increased bets on Fed cuts to another half point this year. while crude oil slumped 8%.
“The question for investors is whether this is the first step in a series of escalations or a negotiating stance that will compel China to make concessions and the Fed to ease,” said Steve Englander, global head of FX research at Standard Chartered Bank. “A risk for investors is that asset-market effects would be largely reversed if the tariff increase were delayed or canceled. If the president can elicit concessions from both China and the Fed, it would be a double win from his perspective.”
Stocks
Japan’s Topix fell 1.6% as of 9:13am in Tokyo.
FTSE China A50 futures fell 3% earlier.
Kospi fell 1.2%.
Australia’s S&P/ASX 200 Index fell 0.3%.
S&P 500 futures dropped 0.1%.
The S&P 500 Index fell 0.9%.
Currencies
The Japanese yen was little changed at 107.43 per dollar after surging 1.3% Thursday.
The euro was at $1.1081.
China’s offshore yuan dipped 0.2% to 6.9662 per dollar.