Asia stocks fall on tariff uncertainty; China sinks on ‘stalled’ US trade talks

Investing.com-- Asian stocks fell on Friday amid increased concerns over U.S. President Donald Trump’s trade tariffs after they were reinstated by an appeals court, overshadowing a prior ruling that blocked the levies. 

Chinese markets led losses after Treasury Secretary Scott Bessent said trade talks with Beijing had stalled in recent weeks, denting bets on a more permanent tariff deescalation.

Regional markets tracked a middling overnight performance on Wall Street, which ended well below intraday highs after Trump’s tariff agenda was reinstated by an appeals court, keeping his 90-day trade deal deadline in place. 

Trump lashed out against the initial court ruling that blocked his tariffs, and said that he was confident the Supreme Court will allow his tariffs to proceed. He also flagged the possibility of using other mechanisms to impose his tariffs- a bulk of which are set to take effect from early-July. 

S&P 500 Futures fell 0.3% in Asian trade. Focus is now on PCE price index data- the Federal Reserve’s preferred inflation gauge-- which is due later in the day. 

Chinese stocks fall as US trade talks stall 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell between 0.5% and 0.7%, while Hong Kong’s Hang Seng index slid 1.5%. 

Outsized losses in Chinese markets came after Bessent said trade talks with China had “stalled” in recent weeks, although he did express confidence that negotiations will pick up again. 

But Bessent’s comments ramped up concerns that Washington and Beijing will not be able to reach a more permanent trade deal, especially as rhetoric between the two countries soured over the past week. China repeatedly criticized the U.S.’ controls on its chip industry, while Washington imposed even more export restrictions against Beijing. 

The two had agreed earlier in May to deescalate their bitter tariff exchange for an initial period of 90 days. But U.S. tariffs on China still remained relatively high, keeping imports from the country costly. 

Japan shares fall as inflation rises

Japan’s Nikkei 225 and TOPIX indexes fell 1.3% and 0.7%, respectively, after Tokyo consumer inflation data read stronger than expected for May.

The reading usually acts as a bellwether for nationwide inflation, with Friday’s reading giving the Bank of Japan even more impetus to raise interest rates. Analysts are now watching for a 25 basis point hike in July. 

Other data also showed some resilience in Japan’s economy. Industrial production shrank less than expected in April, while retail sales grew more than expected.

The yen firmed after the economic prints, which also pressured Japanese stocks. 

Other Asian markets sank on Friday as increased legal wrangling over Trump’s tariffs ramped up uncertainty over their inevitable economic impact. 

Technology stocks lost ground as initial optimism over a strong quarter print from market darling NVIDIA Corporation (NASDAQ:NVDA) ran dry. 

South Korea’s KOSPI fell 0.5% as local chipmakers and tech stocks reversed course from yesterday, while Singapore’s Straits Times index fell 0.3%. 

Australia’s ASX 200 was flat, as softer-than-expected retail sales data spurred some bets on more interest rate cuts by the RBA.

Gift Nifty 50 Futures for India’s Nifty 50 index rose 0.1% pointing to a stronger open as the index found its footing below 25,000 points.