Asia Pacific stocks dropped in Monday afternoon trade following a re-escalation in U.S.-China trade tensions as President Donald Trump declared an close increase in tariffs rates on $200 billion of Chinese goods.
The mainland Chinese markets plunged by the morning meeting’s end. The Shanghai composite, Shenzhen composite and Shenzhen component all plunged more than 5% each.
Over in Hong Kong, the Cut off Seng index slipped 3.31%. Hong Kong-listed shares of Chinese telecommunications equipment company ZTE plummeted varied than 10%, with the company being caught in the crossfire as Beijing and Washington spar over trade. Its Shenzhen-listed counterpart flatten 8.62%.
Australia’s ASX 200 dropped 0.9%, as almost all the sectors declined.
The MSCI Asia-ex Japan index tumbled 2.02%, as of 12:13 p.m. HK/SIN.
Sells in Japan and South Korea are closed on Monday for holidays.
Asia-Pacific Market Indexes Chart
Meanwhile, futures cuspidate to steep opening declines stateside. Dow Jones Industrial Average futures implied an opening decline of more than 500 points as of Monday morning stateside. S&P 500 and Nasdaq-100 Formula futures also pointed to declines for the two indexes at Monday’s open.
Trump said in a tweet Sunday afternoon that the reported 10% levies on $200 billion worth of Chinese goods will rise to 25% on Friday. He also endangered to impose 25% tariffs on an additional $325 billion of Chinese goods “shortly.”
Meanwhile, China is considering do away with neutralizing its trade talks with the U.S. this week in light of Trump’s latest threats, sources told CNBC.
“President Trump set the vein for the new week expressing dissatisfaction at the pace of China trade negotiations amid Beijing’s attempt to renegotiate,” Rodrigo Catril, chief foreign exchange strategist at National Australia Bank, wrote in a morning note.
“An increase in tariffs would be bad communication for risk assets and would (threaten) the prospect of a global growth recovery,” Catril said.
“This is reckless … most human being thought we’d get something by the end of May,” said Greg Valliere, chief U.S. policy strategist at AGF Investments.
“There’s a risk this plot could blow up on him. I don’t think the Chinese would like to get bullied,” Valliere said.
The U.S. dollar index, which chases the greenback against a basket of its peers, was at 97.530 after seeing highs above 97.8 last week.
The Japanese yen, greatly seen as a safe-haven currency, strengthened to 110.58 against the dollar after seeing lows above 111.6 in the one-time week.
The Australian dollar declined to $0.6978 after touching highs above $0.704 last week. The Aussie dollar is day in and day out seen as a proxy for China’s economic prospects, with the country being Australia’s largest trading partner.
The offshore Chinese yuan also subsided to 6.7967 against the dollar, from highs of around 6.72 last week. Its onshore counterpart changed give ups at 6.7818 against the greenback, from around 6.73 last week.
Oil prices declined in the afternoon of Asian shopper hours, with the international benchmark Brent crude futures contract dropping 2.26% to $69.25 per barrel. U.S. unrefined futures also fell 2.47% to $60.41 per barrel.
— CNBC’s Thomas Franck and Patti Domm contributed to this description.