Investing.com – Asian equities extended their losses in afternoon trade on Monday as fears of a full-blown trade war between China and the U.S. intensified.
The U.S. sent China a to-do-list in a letter, including a reduction in tariff on U.S. autos, more purchases in U.S.-made semiconductors and grant U.S. firms more access to the Chinese financial sector, according to reports on Monday.
The news came after U.S. President Trump signed a memorandum last week to impose tariffs on up to $60 billions of imports from China.
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 profits damaged in a trade war.
Japan’s Nikkei outperformed its regional peers and closed 0.6% higher after spending most of the morning trading session in the red.
In China, the Shanghai Composite fell 1.3% while the Shenzhen Component lost 0.4% by 2:30AM ET (06:30GMT). China oil futures took center stage as it marked its debut 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.
Comments by the country’s industry minister Miao Wei caught some attention as he said China would not export any excess capacity to countries in its Belt and Road initiative.
Meanwhile, Hong Kong’s Hang Seng index continued its tumble and slipped 0.2%. China Petroleum & Chemical Corp (HK:0386) (Sinopec), 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.
Down under, Australia’s S&P/ASX 200 slumped 0.5% as losses in the financials and telecoms services sectors led shares lower. Reports that Prime Minister Malcolm Turnbull’s government lost its 29th straight opinion poll gathered focus as the result put Turnbull and his party’s plans to push through corporate tax cuts through parliament under pressure.