Daily Times

Asian markets fell Monday as fears of a global trade war continue to dog investors, with Donald Trump threatening fresh tariffs on European cars and reports he is considering curbs on Chinese investment in the US.

There was little sign of relief after equities suffered a pummelling last week in response to tit-for-tat warnings by Beijing and Washington, which has fuelled concerns about the potential damage to the world economy.

The uncertainty overshadowed a modest increase in oil output agreed by OPEC and Russia and Chinese easing measures.

Tokyo ended 0.8 percent lower, while Hong Kong and Shanghai were both off more than one percent. Sydney lost 0.2 percent and Singapore shed 0.8 percent.

Taipei and Manila were both one percent lower, while Seoul and Wellington barely moved.

In early European trade London fell 0.7 percent, while Paris and Frankfurt each shed 0.6 percent.

Concerns the tariff spat could turn into a full-blown trade war were stoked Monday following reports that the Treasury Department is looking at an emergency law beefing up scrutiny of investment by Chinese firms in sensitive US industries.

Treasury Secretary Steven Mnuchin is expected to push the plan this week, Bloomberg News reported.

“This one could well result in an escalating trade war,” Lee Ferridge, a macro strategist at State Street Corp., told Bloomberg TV. “Volatility is going to continue to rise from here.”

China easing

While some observers are saying Trump’s moves are part of a negotiating tactic, he has shown no sign of backing down and on Friday threatened to impose a 20 percent tariff on cars imported from the European Union. That came just after the bloc imposed levies on US products, including bourbon, jeans and motorcycles.

Still, late Sunday he tweeted: “The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!”

The People’s Bank of China on Sunday said it would lower the amount of cash lenders must keep in reserve as it looks to soothe investors worried about a trade conflagration.

The cut — which will free up more than $100 billion for banks — is set to come into effect on July 5, the day before new US tariffs are due to be imposed on Chinese imports worth $34 billion.

While broad markets are taking another hit, energy firms in Asia were mostly up after OPEC agreed to increase oil production by around a million barrels a day from July.

But officials admitted actual output would likely be much lower as some countries struggle to lift production.

Brent jumped more than three percent on Friday while WTI climbed more than four percent, though both contracts dipped Monday on concerns about the impact a trade war would have on demand.

On currency markets the Turkish lira, which had lost some 20 percent in value against the dollar this year, surged about three percent after President Recep Tayyip Erdogan scored a decisive election victory, soothing worries of a prolonged period of political uncertainty.

Key figures

Tokyo – Nikkei 225: DOWN 0.8 percent at 22,338.15 (close)

Hong Kong – Hang Seng: DOWN 1.3 percent at 28,961.39 (close)

Shanghai – Composite: DOWN 1.1 percent at 2,859.34 (close)

London – FTSE 100: DOWN 0.7 percent at 7,626.54

Euro/dollar: DOWN at $1.1654 from $1.1658 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.3251 from $1.3260

Dollar/yen: DOWN at 109.56 yen from 109.98 yen

Oil – West Texas Intermediate: DOWN 17 cents at $68.41 per barrel

Oil – Brent Crude: DOWN $1.31 at $74.24 per barrel

New York – Dow Jones: UP 0.5 percent at 24,580.89 (close).

Published in Daily Times, June 26^th 2018.