Markets

Asian Shares Tumble On U.S.-China Trade War Concerns

(RTTNews) - Asian stocks tumbled on Monday following a whirlwind escalation of the U.S.-China trade war over the weekend.

With both the U.S. and China announcing retaliatory tariffs against one another on Friday, investors largely ignored a dovish speech by Fed Chief Jerome Powell at the Jackson Hole Economic Policy Symposium.

Chinese shares tumbled and the yuan plunged to an 11-year low as investors fretted about the impact of new U.S. tariffs on China's economic growth. A weekend flare-up in violence during anti-government protests in Hong Kong added to the selling pressure.

The benchmark Shanghai Composite Index slumped 33.86 points, or 1.2 percent, to 2,863.57 while Hong Kong's Hang Seng Index plunged 499.00 points, or 1.9 percent, at 25,680.33.

Japanese shares hit three-week lows and the yen surged to its highest levels since January 2019 as a fresh escalation in the U.S.-China trade war sapped investors' appetite for risk.

The Nikkei 225 Index to 20,173.76, its lowest level since August 6th, before recouping some of its loss to end the session down 449.87 points, or 2.2 percent, at 20,261.04.

Exporters Sony, Honda Motor, Panasonic and Canon fell between 1.1 percent and 2.3 percent. Machinery and chip-equipment makers, which rely on China demand, were also hit hard.

Yaskawa Electric plunged 5.6 percent and Fanuc dropped 3.6 percent. In the tech sector, Tokyo Electron, TDK Corp and Screen Holdings all ended down around 3 percent.

Australian markets tumbled, dragged down by banks and mining companies. The benchmark S&P/ASX 200 Index dropped 83.00 points, or 1.3 percent, to 6,440.10, while the broader All Ordinaries Index ended down 83.30 points, or 1.3 percent, at 6,531.

The big four banks fell between 0.7 per cent and 1.4 percent while mining heavyweights BHP and Rio Tinto lost 2.1 percent and 2.6 percent, respectively. Smaller rival Fortescue Metals slumped 5.3 percent despite posting record annual earnings.

Building materials maker Boral plummeted 20.6 percent after forecasting a weaker profit in the coming year. Oil Search, Santos and Woodside Petroleum declined 3-4 percent as oil prices fell for a fourth day.

G8 Education plunged 16.1 percent as it recorded a 20 percent nosedive in first-half profit. Likewise, IOOF Holdings fell nearly 7 percent on weak earnings results.

On the other hand, gold miner Evolution soared 9 percent, Newcrest rallied 4.6 percent and Resolute Mining jumped 10.4 percent as gold prices reached a fresh six-year high on safe-haven demand.

Seoul stocks succumbed to heavy selling pressure as the escalating trade war between the country's two largest trading partners threatened to derail global growth leading into 2020. The Kospi slumped 31.99 points, or 1.6 percent, to 1,916.31.

New Zealand shares fell sharply, with the benchmark S&P/NZX 50 Index ending down 138.88 points, or 1.3 percent, at 10,483.47. Healthcare firm EBOS Group paced the declines to end down about 3 percent.

New Zealand's trade deficit widened in July from last year as exports declined amid an increase in imports, a government report showed. Exports of goods fell 5.8 percent annually to NZ$5 billion in July, while imports advanced 3.1 percent to NZ$5.7 billion.

U.S. stocks tumbled on Friday amid trade tensions after Beijing imposed retaliatory tariffs on imports of U.S. goods and President Donald Trump ordered American companies to "immediately start looking for an alternative to China," saying the U.S. does not need China and would be "far better off without them".

Trump tweeted that America will hike tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent. At the G-7 summit over the weekend in France, Trump said he regrets not raising tariffs even higher and added that he could declare the U.S.-China trade war a national emergency.

Meanwhile, Fed Chair Jerome Powell reiterated during his prepared remarks in a widely anticipated speech in Jackson Hole, Wyoming, that the central bank will "act as appropriate" to sustain the U.S. economic expansion.

The Dow Jones Industrial Average slumped 2.4 percent, the tech-heavy Nasdaq Composite lost 3 percent and the S&P 500 shed 2.6 percent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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