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Monday August 10th, 2020 12:44AM

Asian stocks plunge on US-China trade war worries

By The Associated Press
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BEIJING (AP) — Asian stock markets plunged Friday after President Donald Trump's surprise threat of tariff hikes on additional Chinese imports.

Tokyo's main market index fell 2.5% and Hong Kong's benchmark lost 2.3%. Markets in Shanghai, Sydney and Seoul also declined.

Trump's announcement of 10% tariffs on $300 billion of Chinese goods, due to take effect Sept. 1, surprised investors after the White House said Beijing promised to buy more farm goods. That came as their latest round of trade talks ended in Shanghai.

That added to investor unease following Federal Reserve Chairman Jerome Powell's suggestion Wednesday that the U.S. central bank had no plans for an extended cycle of interest rate cuts.

"Markets are reeling after President Trump expressed his frustration with China's stalling techniques," said Stephen Innes of VM Markets in a report. "With the global markets on edge after Chair Powell's communication failed so miserably, few traders have been willing to step in front of this steamroller."

The Shanghai Composite Index lost 1.8% to 2,858.04 while Tokyo's Nikkei 225 declined to 21,014.62.

Hong Kong's Hang Seng fell to 26,935.26 while Seoul's Kospi shed 0.2% to 2,001.09. Sydney's S&P-ASX 200 retreated 0.3% to 6,768.70 and India's Sensex was down 0.8% at 36,718.75. Markets in New Zealand, Taiwan and Southeast Asia also declined.

On Wall Street, the benchmark Standard & Poor's 500 fell for a fourth day, losing 0.9% to 2,953.56.

The Dow Jones Industrial Average declined 1% to 26,583.42. The Nasdaq composite ended 0.8% lower at 8,111.12.

The escalation in U.S.-Chinese trade tension comes after both sides resumed negotiations.

In a series of tweets, Trump noted that while slow-moving negotiations have been "constructive," China has not followed through on some prior agreements.

Washington has imposed tariffs of 25% on $250 billion worth of Chinese goods over complaints Beijing steals or pressures companies to hand over technology. Beijing retaliated with tariffs on $110 billion of American goods, including agricultural products, in a direct shot at Trump supporters in the U.S. farm belt.

Unlike earlier tariffs, which were meant to minimize the impact on ordinary Americans by targeting industrial goods, the new ones would affect a wide range of consumer products.

Trump also expressed frustration the Fed isn't cutting interest rates more aggressively.

The Fed cut its key interest rate for the first time in a decade Wednesday, citing uncertainty over the U.S. trade conflicts.

U.S. share price declines come despite unexpectedly strong corporate earnings.

Oil companies Exxon and Chevron will report results on Friday. The government will also release its employment report for July on Friday.

Qualcomm fell 2.7% after the chipmaker gave investors a surprisingly weak profit and revenue forecast because of problems in China. A ban on exports to Chinese tech giant Huawei hangs over the company.

JAPAN-KOREA TENSION: Japan's Cabinet approved removing South Korea from a list of countries with preferential trade status, stepping up pressure in a dispute over export controls and compensation for wartime Korean laborers. The decision increases controls on exports of dozens of products with possible military uses. It follows a requirement for approval of sales to South Korea of materials used in semiconductors, smartphones and other high-tech devices. South Korea's government expressed "deep regret" and said it will respond.

ENERGY: Benchmark U.S. crude jumped $1 to $54.95 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $4.53 on Thursday — its biggest drop in more than four years — to $53.95. Brent crude, used to price international oils, soared $1.43 to $61.93 per barrel in London. It fell $4.55 the previous session to $60.50.

CURRENCY: The dollar fell to 107.12 from Thursday's 107.35 yen. The euro weakened to $1.1080 from $1.1085.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Utilities
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