Hong Kong (AFP) – Equities were mostly down in Asia on Monday after Donald Trump ramped up his trade war by announcing huge tariffs on steel and aluminium imports and warned every country would face “reciprocal” levies. Another week got off to an uncertain start following losses on Wall Street that came in reaction to data showing US consumers increasingly worried about inflation and news that far fewer jobs than expected were created last month.
The US president has resumed his hardball tactics on trade since returning to the White House by last week hitting China with a fresh batch of tariffs, having reached a deal to delay measures against Canada and Mexico. The moves have fanned concerns about the global economy and jolted a recent rally in markets. Trump said Sunday 25 percent duties would be imposed on “any steel coming into the United States,” adding this will also affect aluminium. He also said he would announce “reciprocal tariffs” to match his government’s levies to the rates charged by other countries on US products. “Every country will be reciprocal,” he warned, adding that he would provide details on Tuesday or Wednesday.
Guo Jiakun, spokesman of China’s Ministry of Foreign Affairs, reiterated Beijing’s line Monday that “there is no winner in a trade war,” while French foreign minister Jean-Noel Barrot said the European Union will counter in kind to “replicate” any tariffs imposed on it by Washington. The news weighed on commodity-linked currencies, with the Canadian dollar, Mexican peso and South Korean won all weaker. Canada is the largest source of steel and aluminium imports to the United States, according to US trade data. Brazil, Mexico and South Korea are also major steel providers to the country.
At a meeting with Prime Minister Shigeru Ishiba in Washington on Friday, Trump threatened to target Japanese goods if the US trade deficit with the country is not equalised. Equities struggled, with Sydney, Seoul, Manila, Bangkok, Mumbai, Jakarta, Wellington and Taipei all lower.
– ‘It’s an escalation’ –
“Trump’s latest move isn’t merely another trade skirmish; it’s an escalation of his ‘America First’ trade doctrine where ‘no country is off-limits’,” said Stephen Innes at SPI Asset Management. “This high-stakes gamble could disrupt global supply chains. Markets have witnessed this scenario before — last-minute exemptions and backroom deals (see: Mexico and Canada tariffs) — but if Trump maintains his hardline stance this time, Asian economies will be the first to feel the impact.”
Still, Hong Kong and Shanghai extended last week’s gains, with Chinese tech firms boosted by the emergence of startup DeepSeek, which has shaken up the AI sector with a chatbot that it said rivaled those of US giants but at a fraction of the cost. There were also gains in Singapore, while Tokyo was marginally higher. London, Frankfurt and Paris rose at the open. All three main indexes in New York fell as the University of Michigan’s consumer survey showed a drop in consumer sentiment in February to 67.8, down from 71.1 in January.
Another report showed respondents expect inflation to hit 4.3 percent a year from now, up a full percentage point from a month earlier. Separate data showed the world’s top economy created 143,000 jobs last month, down from a revised 307,000 in December and below forecasts. The readings did little to alter traders’ view that the Federal Reserve will cut interest rates two times at best this year, after boss Jerome Powell said after its January meeting that officials were in no “hurry” to move again.
Among companies, Nippon Steel briefly fell more than two percent in Tokyo, following Trump’s Friday announcement that the Japanese giant would make a major investment in US Steel, but will no longer attempt to take it over. The firm pared its losses to end 0.5 percent lower. US Steel dived 5.8 percent in New York on Friday.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: FLAT at 38,801.17 (close)
Hong Kong – Hang Seng Index: UP 1.8 percent to 21,521.98 (close)
Shanghai – Composite: UP 0.6 percent to 3,322.17 (close)
London – FTSE 100: UP 0.2 percent at 8,716.57
Euro/dollar: DOWN at $1.0312 from $1.0328 on Friday
Pound/dollar: UP at $1.2406 from $1.2405
Dollar/yen: UP at 152.17 yen from 151.43 yen
Euro/pound: DOWN at 83.12 pence from 83.24 pence
West Texas Intermediate: UP 0.7 percent at $71.51 per barrel
Brent North Sea Crude: UP 0.7 percent at $75.20 per barrel
New York – Dow: DOWN 1.0 percent at 44,303.40 points (close)
© 2024 AFP
