President Trump sent Asian markets plunging on Monday after threatening to hike tariffs on $2000-billion of Chinese goods at the end of the week in a bid to speed up trade talks between the economic superpowers.
The two sides have imposed tariffs on $360-billion in two-way trade since last year. But Trump and his Chinese counterpart Xi Jinping agreed a truce in December, helping fan a surge across world stock markets for the past four months.
News that the People’s Bank of China would slash the amount of cash lenders must keep in reserve, to support small businesses, had little impact in the face of Trump’s warning.Manila and Jakarta were also sharply lower. Tokyo and Seoul were closed for holidays.“Trade had been put to the side by many market participants,” said Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs. “Market pricing assumed there would be some kind of a deal, and no further escalation in tariffs.
“Investors will remain bearish on the yuan, as they reprice in trade war risks because the new developments are a reversal of previous positive progress,” Ken Cheung, senior foreign-exchange strategist at Mizuho Bank. “The news was unexpected.” Adding to weakness in the sector is the US drive to increase output, which comes as it reports rising stockpiles, which are offsetting unrest in Libya, tensions with Iran and production caps by OPEC and Russia.
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