Trade war fears push Asian stocks lower
AFP – Asian stocks dropped sharply at the open Tuesday, following Wall Street lower as fears of a trade war between the United States and China battered market sentiment.
Tokyo led the declines, with the benchmark Nikkei 225 index shedding 1.51 percent in early trade.
China followed suit, with the main Shanghai Composite Index falling 1.05 percent. Seoul was down more than half a percentage point and Hong Kong was off one percentage point.
Traders were spooked by Chinese retaliatory action on trade with the US, as the government in Beijing slapped tariffs on 128 US imports worth $3 billion, including fruit and pork.
In addition to that move, US President Donald Trump again threatened to tear up the North American Free Trade Agreement, tweeting that Mexico was doing too little to counter illegal immigration into the United States.
Investors also took their cue from US markets which tumbled on the first trading session back after Easter holidays, both on trade fears and a bearish turn for tech stocks.
The Dow Jones Industrial Average closed 1.9 percent lower while the broad-based S&P 500 shed 2.2 percent.
But it was tech stocks that led the declines, with the Nasdaq dropping 2.7 percent.
Giants Amazon, Facebook and Tesla Motors suffered the largest drops but the negative feeling infected the broader market.
Amazon sank 5.2 percent after a series of attacks by Trump in recent days in which he accused the retailer of profiteering at the expense of the US Postal Service.
"It started with the tech stocks and it’s become ‘throw the baby out with the bathwater,’" said J.J. Kinahan, chief market strategist at TD Ameritrade.
"They’re reassessing the valuation on the entire market," said Kinahan. "A while ago all news was good news. Now (the) news is all things to be afraid of."
With traders in a bearish mood, the yen rose due to its status as a safe haven, further depressing the stock of Japanese exporters which suffer when the currency gains.
Nintendo tumbled 3.12 percent, Toyota was down 1.00 percent, while Sony lost 1.10 percent.
The dollar fell to 105.76 yen from 106.29 yen in Asian trade on Monday afternoon.
Against the unsettling background, "the yen has re-emerged as the weapon of choice," David de Garis, director of economics and markets at National Australia Bank, said in a commentary.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 1.5 percent at 21,064.64
Hong Kong – Hang Seng: DOWN 1.0 percent at 29,789.97
Shanghai – Composite: DOWN 1.05 percent at 3,130.01
Dollar/yen: DOWN at 105.76 yen from 106.29 at 0730 GMT Monday
Euro/dollar: DOWN at $1.2306 from $1.2328 at 0730 GMT Monday
Pound/dollar: DOWN at $1.4059 from $1.4060 at 0730 GMT Monday
Oil – West Texas Intermediate: UP 13 cents from 63.01 per barrel (Monday close)
Oil – Brent North Sea: UP 15 cents from $67.64 per barrel (Monday close)
New York – Dow: DOWN 1.9 percent at 23,644.19 (close)
London – FTSE 100: CLOSED