Asian markets slid Thursday as U.S.-China trade tensions rose, with President Donald Trump saying China “broke the deal” and China vowing to retaliate if the U.S. raises tariffs on Friday.
The U.S. is set to raise tariffs on $200 billion of Chinese goods to 25% from 10% on Friday. “You see the tariffs we’re doing? Because they broke the deal. They broke the deal,” Trump said at a rally in Florida on Wednesday night. “They can’t do that, so they’ll be paying.” Still, Trump predicted “it will all work out.”
Beijing will be forced to retaliate if the increases go ahead Friday as planned, China's Commerce Ministry said Thursday. It gave no details of possible penalties. “China deeply regrets that if the U.S. tariff measures are carried out, China will have to take necessary countermeasures,” said a Commerce Ministry statement.
The Wall Street Journal reported Wednesday night that China had been emboldened to take a harder line on trade talks after comments by Trump — specifically, his attacks on Fed Chairman Jerome Powell to cut interest rates, which China reportedly interpreted as a sign of weakness in the U.S. economy, and a signal that the U.S. was ready to compromise.
China’s Vice Premier Liu He will lead a delegation for ongoing trade talks in Washington on Thursday and Friday, and it is believed to be possible that a final trade deal can still be reached.
On Wall Street, a late-afternoon reversal added to the market’s losses following a steep sell-off a day earlier as investors worry that the costly trade dispute between the world’s two biggest economies will escalate. Only the Dow industrials DJIA, +0.01% closed with a small gain. Stock futures fell anew on Thursday, indicating another tough day for Wall Street.
Japan’s Nikkei NIK, -0.93% closed down 0.9%, and Hong Kong’s Hang Seng Index HSI, -2.32% was down nearly 1.5% as markets were near to closing. The Shanghai Composite SHCOMP, -1.48% finished down 1.5% while the smaller-cap Shenzhen Composite 399106, -1.28% fell 1.2%. South Korea’s Kospi SEU, -3.04% tumbled 3%, and benchmark indexes in Taiwan Y9999, -1.74% , Singapore STI, -0.56% and Indonesia JAKIDX, -0.43% all sank. Australia’s S&P/ASX 200 XJO, +0.42% was one of the few gainers, up 0.4%.
Among individual stocks, Yahoo Japan
4689, +9.39%
soared after SoftBank Group
9984, +0.70%
said it will spend $4 billion to increase its stake in the company. Rakuten
4755, -6.66%
, Toyota
7203, -3.17%
and Sony
6758, -0.71%
fell in other Tokyo trading. In Hong Kong, food processor WH Group
0288, -6.05%
sank, along with tech firms AAC
2018, -5.35%
and Sunny Optical
2382, -4.96%
and China Life Insurance
2628, -4.38%
. Chip maker SK Hynix
000660, -5.35%
dropped in South Korea and Foxconn
2354, -2.36%
slid in Taiwan. Beach Energy
BPT, -0.25%
and Oil Search
OSH, +1.75%
rose in Australia.
“The pressure looks to continue amid the trade concerns found within the market with heightened volatility a new normal this week,” said Jingyi Pan, market strategist with IG in Singapore.
The U.S. and China have raised tariffs on tens of billions of dollars of each other’s goods in their dispute over U.S. complaints about China’s technology ambitions and practices. Investors have been anticipating a deal throughout this year, which contributed to double-digit gains in all the major indexes. But the latest tough talk is raising anxiety and casting more doubt about a resolution.
Benchmark U.S. crude CLM9, -1.08% fell 60 cents to $61.55 a barrel. Brent crude LCON9, -1.01% , the international standard, lost 69 cents to $69.69.
The dollar USDJPY, -0.39% slipped to 109.89 yen from 110.06 yen.
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