Asian stocks slipped today after US President Donald Trump slapped tariffs on imports from Brazil and Argentina to spike global trade tensions once again.
Soft US manufacturing data compounded the problem for world markets and saw global stocks fall into the red as trading opened today.
The Nikkei 225 fell 0.64 per cent to 23,379.8 points while Hong Kong’s Hang Seng index slipped 0.25 per cent to 26,368, but had fallen as far as 1.44 per cent.
MSCI’s broadest index of Asia-Pacific shares dropped 0.43 per cent and Australian stocks suffered a 2.2 per cent drop, their worst in two months.
Trump said the steel and aluminium tariffs on Brazil and Argentina were in response to the countries allegedly devaluing their currencies, a move that hurt US farmers.
Yesterday US traders reacted nervously to Trump’s latest set of import duties, with the Nasdaq falling 1.1 per cent and the S&P 5090 dropping 0.86 per cent.
The FTSE 100 dropped 0.82 per cent yesterday while Germany’s Dax took a huge two per cent hit.
France’s Cac registered a similarly deep drop, which could worsen today as the President threatened to target cheese and champagne with taxes in revenge for France’s digital tax.
“Equity markets underwent a quick about turn in sentiment yesterday, pivoting sharply from decent gains to fall sharply,” Michael Hewson, chief market analyst at CMC Markets, said.
“Up until then European markets had been basking in the afterglow of improving manufacturing numbers, which was helping raise expectations that the manufacturing sectors in Asia and Europe were in the early stages of a turnaround.
Trump’s announcement saw those gains start to disappear, while the latest US ISM manufacturing numbers completed the job.”
Trump announced the tariff hikes on Twitter yesterday, lashing out at Brazil and Argentina’s “massive devaluation” of currencies.
Data actually suggests both countries have been trying to strengthen their currencies against the dollar.
Trump landed in London overnight to attend the Nato summit, prompting fears he could interfere in the General Election, especially with Labour attacking the Tories for supposedly keeping the NHS on the table in any UK-US trade talks.
“Given the US President’s penchant for opening his mouth unprompted, you can be certain that some elements of the media will only be too keen for his opinions on a range of subjects from trade to the NHS to the Prime Minister himself,” Hewson said.
“The visit has all the hallmarks of a potential banana skin for the Prime Minister at a time when the lead in the polls appears to be starting to narrow in Labour’s favour. Johnson will no doubt be hoping that the US President heeds the advice of his own officials and not comment on the ongoing UK election.”