Asia markets remained mixed on Tuesday afternoon following an escalation in trade tensions between the United States and China.
Australia’s ASX 200 fell 0.48 percent as the energy sector continued its decline, dropping 1.62 percent. The heavily-weighted financial subindex lost its earlier gains to trade largely flat as AMP fell by 1.25 percent.
Earlier, the Reserve Bank of Australia’s minutes from its September policy meeting had highlighted that global tensions from trade policy presented a “material risk to the outlook.”
In contrast, Japan’s Nikkei 225 rose 1.38 percent and the Topix index was up 1.66 percent.
In South Korea, the Kospi returned to positive territory by trading up 0.12 percent as the performance of blue chip stocks remained mixed. Shares of Samsung Electronics were up by about 1.44 percent, Korea Electric Power Corporation was down 1.34 percent and Hyundai Motor was up by 0.39 percent.
South Korean President Moon Jae-in left for Pyongyang on Tuesday for a historic summit with North Korean leader Kim Jong Un, with the aim of mediating stalled U.S.-North Korea nuclear talks and to strengthen inter-Korean relations, according to Yonhap news agency.
In the Greater China markets, markets were in negative territory. Hong Kong’s Hang Seng index was down by 0.74 percent as tech giant Tencent slid by 2.13 percent. Over on the mainland, markets reversed their earlier positive streak. The Shanghai composite was 0.12 percent down while the Shenzhen composite slid by 0.345 percent.
Stateside, President Donald Trump will impose 10 percent tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year, according to a Monday announcement. The White House removed about 300 goods from a previously proposed list of affected products, including smart watches, some chemicals and other products such as bicycle helmets and high chairs. Beijing has already warned that it will retaliate against the measures.
The U.S. has already levied tariffs on $50 billion worth of Chinese products. Beijing responded with measures targeting $50 billion on American goods, raising fears about damage to the U.S. farm industry.
Earlier this month, reports suggested that the U.S. was seeking to restart trade talks with China.
U.S. futures also declined in the morning hours of Asian trade following the announcement. Dow futures were down around 60 points while Nasdaq and S&P futures also continued to point toward negative opens. That followed losses on Wall Street where the Nasdaq Composite fell 1.4 percent.
Analysts said that the focus will now shift towards China’s response to the announcement.
“China may be limited in its ability to impose similar tariffs in volume terms, but it can still aim to disrupt the US supply chain with those tech exports an obvious target and the cancelation of trade talks is also likely to dampen the mood,” Rodrigo Catril, a senior foreign-exchange strategist at the National Australia Bank, wrote in a morning note.
“We think (the) US trade spat with China is not just about bringing manufacturing and jobs back to the US, strategically the US is not happy with the approach China has taken in order (to) modernise itself,” Catril added, noting that one of the key sticking points is intellectual property rights.
In the currency market, the Japanese yen weakened against the dollar, trading at 111.95, while the Australian dollar saw gains to 0.7190, as of 12:24 p.m. HK/SIN.
At the same time, the dollar index, which measures the greenback against a basket of currencies, traded at 94.481, having declined from levels above 94.800 previously.
Analysts at the Commonwealth Bank of Australia suggested that if China decided to cancel new trade talks in response to the U.S. tariffs action, the dollar would likely recover most of its recent losses.
