LONDON • The Shanghai market declined while the US dollar climbed to a seven-month high, as investors braced themselves for a list of Chinese goods targeted in a first round of announced tariffs by the United States.
US President Donald Trump has decided to impose "pretty significant" tariffs and was set to announce a list targeting US$50 billion (S$67 billion) of Chinese goods yesterday.
Chinese stocks led the losses, with the benchmark Shanghai Composite Index plumbing a 20-month low, as investors worried about the economic damage from the trade tensions with the US.
Japan's Nikkei average closed up 0.5 per cent and Australian shares ended 1.3 per cent higher. The Asia-Pacific MSCI index ex-Japan edged down 0.3 per cent and was set for a weekly loss of more than 1 per cent.
Many markets in Asia, including Singapore and Kuala Lumpur, were closed yesterday for holidays celebrating the end of Ramadan.
It is not clear when President Trump will activate the measures, but rising Sino-US trade tensions will put more pressure on China's economy, which is starting to show signs of cooling after a multi-year crackdown on riskier lending.
European shares were set for their best week in more than three months as investors pushed back expectations for an interest rate increase after Thursday's European Central Bank (ECB) meeting.
The pan-European Stoxx 600 index was down 0.2 per cent, but up 2.2 per cent on the week.
The euro was headed for its worst weekly loss in 19 months after the ECB signalled interest rates would be left at record lows into at least mid-2019. The common currency shed 1.9 per cent to the dollar, its biggest daily decline since Britain voted to quit the European Union in 2016. The drop in the euro gave a lift to the US dollar, which hit its highest against a basket of currencies since November last year.
Oil prices were little changed as investors eyed a key Organisation of Petroleum Exporting Countries meeting in Vienna. Saudi Arabia and Russia, architects of a producer deal to cut output, have indicated they want production to rise.
West Texas Intermediate crude oil futures were down 0.2 per cent at US$66.76 per barrel; Brent was down 0.6 per cent at US$75.49.