- Asian stocks drop, tracking the overnight losses on Wall Street.
- China’s retaliation has shattered dreams of a permanent trade truce.
Asian stocks are a sea of red as China’s retaliation reignited trade war with the US, shattering the illusion that the two sides can reach a permanent trade truce.
China said on Monday that it would increase tariffs on nearly $60 billion worth of US goods, in response to the US’ decision to hike tariffs on $200 billion of Chinese goods from 10% to 25%.
Further, China’s retaliation did not go down well with Washington with Trump threatening more action. Investors are worried that the tit-for-tat tariffs could go on indefinitely, leading to a deeper global economic slowdown.
As a result, riskier assets across the globe have come under pressure. The US stocks slipped on Monday with the Dow Jones Industrial Average falling more than 600 points.
The risk aversion seems to have hit the Asian shores. As of writing, the Shanghai Composite is reporting a 0.35% drop. Japan’s Nikkei and Australia’s S&P/ASX 200 are also down 0.7% and 1%, respectively. South Korea’s Kospi, however, is flashing green with 0.30% gains.
The futures on the S&P 500 are also up 0.5% at press time, possibly due to Trump’s positive comments on trade negotiations. The US President was out on the wires earlier today, stating that he expects trade talks to be successful. So far, however, the uptick in the S&P 500 futures has failed to put a bid under the Asian equities.
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