Investing.com – Asian equities fell in morning trade on Monday amid fears of a full-blown trade war between China and the U.S.
U.S. President Trump signed a memorandum last week to impose tariffs on up to $60 billions of imports from China, in addition to duties on steel and aluminum on a number of countries announced earlier in March.
In response, Chinese officials and state media said the country would defend itself in a trade war, warning that Trump’s tariff plans could backfire on the American corporate giants such as Apple (NASDAQ:AAPL), Boeing (NYSE:BA) and Intel (NASDAQ:INTC) which have huge exposure in China and would see their revenues damaged in a trade war.
Japan’s Nikkei traded 0.5% lower by 10:45pm ET (02:45GMT) with a strengthening yen being cited as the catalyst for the selling in equities. The safe-haven currency was also lifted by views that the country’s political scandal could deepen. Toshiba Corp. (T:6502) made headlines after the company said on Monday it had not receive the required clearance from regulators to sell its $18 billion memory-chip business by the end-March deadline.
In China, the Shanghai Composite fell 1.4% while the Shenzhen Component gained 0.4%. China oil futures traded for the first time on the Shanghai International Energy Exchange on Monday at 9AM local time. China, the world’s biggest oil buyer, is now offering yuan-denominated futures that foreigners could trade – A first in Chinese commodities. People’s Bank of China’s Yi Gang’s comment garnered some attention as he said he promises a more open financial sector.
Meanwhile, Hong Kong’s Hang Seng index continued its tumble and slipped 0.4% in morning trade. Index heavyweight Tencent Holdings Ltd (HK:0700) kept its “Outperform” rating at Credit Suisse despite concerns on its latest earnings as the company’s shares fell as much as 8% on Friday. China Petroleum & Chemical Corp (Sinopec) (HK:0386), the world's biggest refiner, announced it would offer a record dividend after its fuels and chemical segments helped boost the company’s annual profit by about 10%.
Elsewhere, reports that South Korea and the U.S. reached an agreement on revising the allies’s six-year-old bilateral trade deal were in focus, although impacts on equities seemed to be limited.
“We expect to sign that agreement soon,” Mnuchin said. “South Korea will reduce the amount of steel that they send into the United States as a part of this,” Mnuchin said, adding that the agreement is an “absolute win-win” for both countries.