Asia shares slugged by threat of more US tariffs on Chinese goods

A pedestrian walks past a stock indicator board for the Tokyo Stock Exchange in Tokyo, on Aug 13, 2018.
A pedestrian walks past a stock indicator board for the Tokyo Stock Exchange in Tokyo, on Aug 13, 2018.PHOTO: AFP

SYDNEY (REUTERS) - Most Asian share markets slid on Monday (Sept 17) amid reports Washington was about to announce a new round of tariffs on Chinese imports, setting the stage for possible reprisals by Beijing.

Liquidity was thin, with Japan on holiday, and moves in currencies and bonds were minor.

Hong Kong markets opened as normal after a super typhoon brushed the city on its way to make landfall in China's Guangdong, the country's most populous province.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.2 per cent, snapping three straight sessions of gains. Shanghai blue chips fell 1.1 per cent, while the Hang Seng shed 1.6 per cent.

Singapore's Straits Times Index was trading down down 0.7 per cent at 3,139.91 as of 1.55pm.

EMini futures for the S&P 500 were off 0.2 per cent and spreadbetters expect London's FTSE 100 to open 11 points lower, Frankfurt's DAX 24 points lower and Paris' CAC 40 to ease 9 points.

US President Donald Trump is likely to announce new tariffs on about US$200 billion of Chinese imports as early as Monday, a senior administration official told Reuters.

 
 
 

The tariff level will probably be about 10 per cent, the Wall Street Journal reported, below the 25 per cent the administration had said it was considering.

The WSJ also reported Beijing may decline to participate in proposed trade talks with the United States later this month if the Trump administration moves forward with the tariffs.

Other officials who advise the country's leaders are suggesting China impose limits on the sale of parts and supplies needed by US businesses, using "export restraints" to threaten their supply chains.

"Further escalation looks very likely in which the rate will likely be raised to 25 per cent and more US tariffs threatened, while China may potentially pull out of trade talks entirely and escalate on the new front of outright export restrictions," wrote analysts at JPMorgan.

"This would of course only inflame the situation further."

In currency markets the dollar index was a fraction softer at 94.908, having bounced from a low of 94.359 at the end of last week as Treasury yields rose.

The euro held at US$1.1630 after retreating from a peak of US$1.1721 last Friday, which also marks stiff chart resistance. The dollar was idling at 111.98 yen, having run into offers around 112.15/20.

In commodity markets, gold was stuck at US$1,194.70 an ounce and some way from last week's top at US$1,212.65.

Oil prices eased as the US-China trade dispute outweighed the risks to supply from upcoming sanctions on Iran. Brent dipped 11 cents to US$77.98 a barrel, while US crude fell 10 cents to US$68.89.