Asian markets slump again amid deepening fears of China-U.S. trade war

Asian stocks opened broadly lower Tuesday, further weighed down by fears that China and the Trump administration were digging deeper a trade conflict that had no easy exit.

The slump in Asia came a day after Wall Street had its worst day of the month, shedding more than 475 points, or 2 percent.

The latest sell-off added to steep losses in major Asian exchanges Monday amid aggressive rhetoric from Washington and China’s vows to stand its ground.

Japan’s Nikkei began with a sharp drop of nearly 1 percent before clawing back some gains. Other market indexes in the region also were down, including the Shanghai Composite and Hang Seng. In Seoul, the Kospi fell after trading opened — all signaling another possible rough day for European markets and the Dow.

Even more turmoil could be ahead. U.S. tariffs on an additional $34 billion worth of Chinese products are scheduled to take effect July 6. China has vowed more trade retaliation, and the Chinese central bank has loosened banking rules to pump more than $100 billion into the country’s financial system.

It was a sign that Beijing is responding to an economic slowdown but also bracing for a possible long-haul trade fight with the White House.

On Monday, the Trump administration gave another jolt to markets.

Writing on Twitter, Treasury Secretary Steven Mnuchin said U.S. regulators will seek to block investment on “all countries that are trying to steal our technology.” Mnuchin added that the planned move is “not specific to China,” but Beijing’s policies to tie trade to access to emerging technologies have been at the heart of President Trump’s complaints against China.

Masatoshi Kikuchi, chief equity strategist at Mizuho Securities in Tokyo, said it is “clear the trade war fears are affecting what’s happening into the markets,” and traders were closely watching the next moves on both sides.

Yuki Oda in Tokyo contributed to this report.

Content source