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.
Tuesday’s trading in Asia included no steep dives, but it underscored the alarm and uncertainties over the trade feud that have pushed down markets for the past two weeks.
Japan’s Nikkei began with a sharp drop of nearly 1 percent before clawing back to close slightly up. Other indexes had another losing day, including the Shanghai Composite and Seoul’s Kospi. In Hong Kong, the Hang Seng Index was generally flat.
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 in U.S. technology companies from and U.S. high-tech exports to “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.
Ahn Deuk-geun, an international trade expert at Seoul National University’s Graduate School of International Studies, said the recent decline in Asian stocks “shows the impact of escalating trade war between China and the U.S.”
“Even amid relieved geopolitical tensions following North Korea rapprochement,” Ahn said, “the jitters about the China trade tensions seem to have an overpowering impact on the markets.”
Yuki Oda in Tokyo and Min Joo Kim in Seoul contributed to this report.
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