SINGAPORE - Asian equities regained some ground on Tuesday afternoon (Sept 18) after coming under pressure this morning following the move by US President Donald Trump to slap new tariffs on US$200 billion worth of Chinese imports.
The tariffs take effect on Sept 24, starting at 10 per cent, and will go up to 25 per cent at the start of 2019, unless the two countries agree on a deal. Mr Trump has also vowed further tariffs on the remaining US$267 billion worth of imports should China choose to retaliate.
Chinese markets had earlier borne the brunt of the selloff, with China's A50 Index losing 0.9 per cent, or 101.1 points to 10,955.47, and Hong Kong's Hang Seng retreating 0.6 per cent, or 154.7 points to 26,778.20 in the early morning trade. Nonetheless, the stocks managed to regain some composure after midday - the A50 index leapt 2.1 per cent to 11,184.11, and the Hang Seng was up 0.7 per cent to 27,114.51.
Similarly, South Korea's Kospi fell 0.1 per cent in the morning, but bounced back to 2,308.98 with a 0.3 per cent gain as at 3.30pm.
Elsewhere, Australia's S&P/ASX fell 0.2 per cent to 6,175.10 in the early morning trade, but continued its downward trajectory towards 6,161.50, losing 0.4 per cent as at 3.36pm on Tuesday.
Japanese stocks were among the few that bucked the trend at the opening bell. While Tokyo stocks opened lower, they quickly rebounded as investors braced for Beijing's reaction to the newly announced tariffs. The benchmark Topix Index rose 0.9 per cent to 1,743.65 by 9.58am, and was up 1.8 per cent to 1,759.88 as at 3pm.
On the local bourse, the Straits Times Index (STI) lost 0.7 per cent, or 20.6 points to 3,120.80 as at 9.02am. Tracking other Asian markets, the STI managed to trimmed its losses, and was down by 0.2 per cent to 3,135.61, as at 3.54pm on Tuesday.
IG market strategist Pan Jingyi noted that "Asia markets are poised to slide under the shadows of the latest trade cloud with the Trump administration's trade announcement packing more bite than expected. As it is, China had previously made clear that trade talks will not carry on, should President Donald Trump proceed with the tariffs implementation, to which the latter did announce.
"Look to the state of decline in the Asia region today with early movers certainly having gone ahead in red. For the local STI, the test will be on the 3,114 support."
Across the board, all three local banks also felt the impact of the tariffs - UOB lost 1.2 per cent to $25.67; DBS fell 1 per cent to $24.53; and OCBC dropped 0.5 per cent to $10.99 as at 9.45am on Tuesday.
Manufacturers such as Venture fell 1.9 per cent, orS$0.32 to $16.19; while Hi-P lost 4.5 per cent, or $0.04 to S$0.85.
On the currency front, one US dollar was worth S$1.3729, A$1.3948 and 111.9 yen on Tuesday morning.
Maybank analysts noted that the intensificaiton of trade tensions between the US and China have weighed on Asia ex-Japan (AXJs) currencies, including the yuan.
"China-trade dependent currencies like the AUD are also facing downside pressure. Still, we are not seeing any panic selloff in the AXJs for now. This could be because market is waiting to see how China will respond... The pullback in oil prices on the back of expectations of looming dip in demand should provide the AXJs, particularly the oil dependent currencies like the PHP and INR, with some relief intraday," the analysts pointed out in a research note on Tuesday morning.
Separately, oil markets also fell as the latest escalation in the US-China trade war clouded the outlook for demand, though concerns over tightening supply did offer some support, Reuters reported. Brent crude futures had declined 27 US cents, or 0.35 per cent, to US$77.78 per barrel by 8.54am.
Meanwhile, gold fell 0.3 per cent to US$1,197.58 an ounce, according to data from Bloomberg.