Asian markets tumble as Trump tariffs fan trade war fears

The news was met with anger from key allies including the EU and Canada

Afp March 02, 2018
US President Donald Trump announces tariffs on steel and aluminum imports at a White House meeting with US industry leaders PHOTO: AFP

HONG KONG: Donald Trump's controversial decision to slap tariffs on steel and aluminium imports sent Asian stocks plunging on Friday as the move fuelled fresh fears of a global trade war.

Traders, already on edge owing to worries about rising interest rates, followed their US counterparts in heading to the hills after the president imposed levies on the commodities as part of his "America First" policy.

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The news, which was even opposed by elements inside the White House, was met with anger from key allies including the EU and Canada. China has previously warned it would be forced to act should Trump push through such measures.

The tycoon had campaigned on a protectionist platform, saying the US was being taken advantage of by other countries, and promised to throw up barriers to protect jobs at home.

And analysts said there could be more to come.

"With the elevation of (trade hawk) Peter Navarro this week traders, markets, and business leaders are likely going to have to get used to these types of views continuing to shape policy," Greg McKenna, chief market strategist at AxiTrader, said in a note.

Navarro, a trade hawk and presidential aide, was by Trump's side as he made his remarks.

Wall Street's three main indexes ended sharply down for a third day, and those losses filtered through to Asia, where Tokyo ended 2.5 per cent down while Hong Kong sank 1.5 per cent and Seoul was one per cent off.

Shanghai shed 0.6 per cent, while Sydney and Singapore each gave up 0.8 per cent.

Wellington, Manila, Taipei and Jakarta were also well down.

Aluminium and steel firms took a hit across the region, while firms that use the products - such as electronics and auto makers - were also much lower.

"Traders are selling pinpointed steelmakers and automakers today in the wake of the remarks by Trump, at a time when sentiment has been hit by worries over US interest rates," Hikaru Sato, senior technical analyst at the investment strategy section at Daiwa Securities, told AFP.

However, he added: "But the selling pressure on them may not drag for a long time as the impact of Trump remarks in general are often short-lived."

Japanese giant Toyota warned the car sector would be hurt and the measures would 'substantially' increase the price of cars sold in America.

The announcement overshadowed a second day of congressional testimony by new Federal Reserve boss Jerome Powell, who struck a softer tone than Tuesday, when his championing of the US economy fanned expectations of sharp rate hikes.

Appearing before lawmakers Thursday, he emphasised future interest rates would be gradual and allow the economy to expand.

The comments eased concerns about tighter US monetary policy, adding to selling in the dollar, which was also rattled by the tariffs move.

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The greenback sank against its major peers in New York and extended the losses in Asia, while high-yielding currencies such as the Korean won, Mexican peso and Australian dollar were also higher.

"There is absolutely no reason why the US dollar should benefit from the sort of policies President Trump is now following," AxiTrader's McKenna added.

Tokyo - Nikkei 225: DOWN 2.5% at 21,181.64 (close)
Hong Kong - Hang Seng: DOWN 1.5% at 30,571.75
Shanghai - Composite: DOWN 0.6% at 3,254.53 (close)
Euro/dollar: UP at $1.2270 from $1.2263 at 2140 GMT
Pound/dollar: UP at $1.3780 from $1.3775
Dollar/yen: DOWN at 105.90 yen from 106.25 yen
Oil - West Texas Intermediate: DOWN eight cents at $60.91 per barrel
Oil - Brent North Sea: UP one cent at $63.84 per barrel
New York - DOW: DOWN 1.7% at 24,608.98 (close)
London - FTSE 100: DOWN 0.8% at 7,175.64 (close)

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