Shares in Asia cautiously mixed as trade concerns return to the fore

FAN Editor

Asian markets were narrowly mixed early on Friday, with investors cautious over trade tensions after the U.S. announced tariffs on steel and aluminum imports from several of its allies would be reapplied.

The Nikkei 225 edged up by 0.22 percent and the broader Topix rose 0.35 percent. Automakers were among the best-performing sectors in the morning, with gains also seen in materials and banks. Over in South Korea, the Kospi rose 0.64 percent, outperforming its regional peers.

Australia’s S&P/ASX 200 shed 0.25 percent but was off its session low, with the energy and financial sectors contributing to the decline.

Greater China markets also traded slightly lower. Hong Kong’s Hang Seng Index slipped 0.17 percent as the industrials and materials sectors dragged on the index. On the mainland, the Shanghai composite shed 0.32 percent.

MSCI’s broad index of shares in Asia Pacific excluding Japan edged up by 0.1 percent in Asia morning trade.

Markets in Indonesia were closed on Friday for a holiday.

Trade concerns returned to the fore after the Trump administration said tariffs on steel and aluminum imports from Canada, Mexico and the European Union would take effect Thursday midnight U.S. time. The countries had previously been exempted from those tariffs, originally announced in March.

Canada plans to impose dollar-for-dollar tariffs on the U.S. in retaliation, according to the country’s foreign minister. The EU, another U.S. ally, said it would introduce countermeasures.

“It’s looking like trade protectionism is clearly escalating. It looks like the NAFTA deal that we thought could go through hasn’t and now these steel and aluminum tariffs … There’s a lot of things and I think the markets are starting to get concerned,” Rob Subbaraman, head of emerging markets economics at Nomura, told CNBC’s “Squawk Box” on Monday.

U.S. stocks closed lower amid concerns the moves could lead to a trade war: The Dow Jones industrial average declined 1.02 percent, or 251.94 points, to close at 24,415.84.

Still, major U.S. stock indexes finished the month with gains, with the Dow up 1.05 percent for the month. The Nasdaq composite rose 5.32 percent in May.

Elsewhere, political turmoil in Italy that had spooked global markets this week took a back seat after anti-establishment parties in the country came to a consensus on forming a coalition government.

The dollar index, which tracks the greenback against a basket of currencies, was little changed at 94.001 at 9:53 a.m. HK/SIN. Against the yen, the dollar was slightly firmer at 109.01.

Meanwhile, Brent crude futures slipped 0.04 percent to trade at $77.53 per barrel. U.S. West Texas Intermediate crude futures edged down by 0.15 percent to $66.94 after settling 1.72 percent lower in the last session. U.S. crude fell 2.23 percent in May, breaking a two-month win streak.

Ahead, investors awaited the release of May nonfarm payrolls during U.S. hours as markets consider how many times the Federal Reserve will raise rates this year.

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