Asia shares tumble, with Japan falling more than 2.7%

FAN Editor

Asia markets traded lower Tuesday morning as the U.S.-China trade war intensified, after Beijing confirmed it is suspending agricultural product purchases in response to new American tariffs.

President Donald Trump said last week the U.S. is putting 10% tariffs on another $300 billion worth of Chinese goods starting Sept. 1.

In Japan, the Nikkei 225 plunged 2.73% in early trade, while the Topix index fell 2.61%.

Over in South Korea, the Kospi dropped 2.72%. Australia’s S&P/ASX 200 slipped 2.82%.

Overall, the MSCI Asia ex-Japan index declined 0.94%.

The Tuesday session in Asia followed overnight declines on Wall Street, where the Dow Jones Industrial Average plunged more than 700 points, the S&P 500 dropped nearly 3% and the Nasdaq Composite fell 3.5%. It was the worst percentage drop for all three indexes this year.

Chinese response

The Chinese Ministry of Commerce said Chinese companies have stopped purchasing American agricultural products in response to Trump’s latest salvo and added it would “not rule out” tariffs on newly purchased agricultural goods after Aug. 3. For its part, China is one of the largest buyers of U.S. agriculture.

Investors will be closely watching for where the People’s Bank of China sets its midpoint for the onshore yuan today.

The Chinese central bank sets a daily rate for the currency, allowing it to trade in a band against the greenback within 2% of the midpoint value, also known as the onshore yuan. Its offshore counterpart is used by foreign investors and banks.

“The (midpoint) fix is likely to be below 7.0900,” Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, wrote in a morning note.

The offshore yuan was last at 7.1280 against the greenback.

On Monday, the onshore Chinese currency weakened past the psychologically important 7-yuan-per-dollar threshold for the first time since 2008.

Following that, the U.S. Treasury Department designated China as currency manipulator, a historic move that no White House had exercised since the Clinton administration.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.222 after declining from levels around 98.0 yesterday.

The Japanese yen, widely viewed as a safe-haven currency, traded at 105.60 after strengthening from levels above 106 in the previous session. The Australian dollar changed hands at $0.6764 after falling from levels above $0.678 yesterday.

Elsewhere, shares of Apple suppliers will also be in focus, with the Cupertino-based tech giant seeing its stock drop 5.2% on Monday amid the trade turmoil.

U.S. futures on Monday evening also pointed to further declines for stocks on Wall Street when they open later Tuesday, with the Dow implied to open lower by more than 600 points.

Asia-Pacific Market Indexes Chart

Here is a look at some of the data ahead:

  • Australia: Reserve Bank of Australia interest rate decision at 12:30 p.m. HK/SIN

— CNBC’s Patti Domm and Fred Imbert contributed to this report.

Free America Network Articles

Leave a Reply

Next Post

Trade war turns into 'nasty' currency war as US calls China manipulator for first time since '90s

The Trump administration took the trade war up another notch, calling China a currency manipulator and ratcheting up expectations that the White House has other moves it could make to retaliate against China. Last used in the 1990s, the designation was announced by the U.S. Treasury Monday after U.S. markets […]