Asian markets plunge as Trump threatens to hike China tariffs
Hong Kong: President Donald Trump sent Asian markets plunging Monday after threatening to hike tariffs on USD 200 billion of Chinese goods at the end of the week in a bid to speed up stuttering trade talks between the economic superpowers.
Shanghai and Hong Kong equities led big losses across the region, with the Chinese yuan also taking a battering after the president threw a spanner into the high-level negotiations, which many observers were expecting to wrap up imminently.
"For 10 months, China has been paying Tariffs to the USA of 25 per cent on 50 Billion Dollars of High Tech, and 10 per cent on 200 Billion Dollars of other goods," Trump tweeted Sunday night. "The 10 per cent will go up to 25 per cent on Friday."
The warning will throw a shadow over the next round of talks, with a delegation from Beijing due in Washington this week, with Bloomberg News reporting the Chinese side are considering their position. The two sides have imposed tariffs on USD 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.
"Trump has taken the proverbial sledgehammer to the walnut this morning and the only two words likely to be on the minds of traders and investors this week are 'trade talks'," said OANDA senior market analyst Jeffrey Halley.
In early trade Hong Kong tumbled 2.5 per cent and Shanghai was off more than three percent, with Singapore off 2.8 per cent, Taipei 1.5 per cent off, while Sydney and Wellington were each one per cent down.
Manila and Jakarta were also sharply lower. Tokyo and Seoul were closed for holidays.
"It's making the outcomes more binary, with everybody focused on the Friday deadline," said Joyce Chang, chair of global research at JPMorgan Chase & Co.
"There doesn't seem to be much leeway now to much go past that. It's going to mean that investors will be very focused on the trade issues even beyond China," she told Bloomberg TV.
The yuan also took a hiding, shedding more than 1.3 per cent at one point against the dollar, its heaviest fall in more than three years. The currency had been sitting around 10-month highs on the back of optimism the two sides would sign off on a trade pact.
"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." However, while trading floors are awash with red, Stephen Innes at SPI Asset Management remained positive.
"We do know the president tends to retreat from more aggressive displays, so I am viewing this thinly veiled threat as political posturing or a tactical decision to apply more pressure on China to put through a trade deal that aligns with the best USA economic interest at heart.
"Despite US-China trade talks hitting an apparent impasse based on (the) tweet, I think a deal will be signed shortly."
Trump's outburst overshadowed another blockbuster US jobs report Friday that reinforced the view that the economy is in rude health, while measured wage inflation eased pressure on the Federal Reserve to hike interest rates.
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....
— Donald J. Trump (@realDonaldTrump) May 5, 2019 ">
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....
— Donald J. Trump (@realDonaldTrump) May 5, 2019
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Sri Lankan officials say Iranian navy ship was sinking; 32 onboard hospitalised
Colombo (AP): A top Sri Lankan official says 32 people have been rescued from a sinking Iranian naval ship off Sri Lanka's southern coast and have been admitted to a hospital.
Dr Anil Jasinghe, a top health ministry official, says one of them is in critical condition, seven are receiving emergency treatment, and others are treated for minor injuries.
Foreign Minister Vijitha Herath told Parliament that Sri Lanka's navy received information that the ship Iris Dena with 180 on board was in distress, and that the island nation sent ships and air force planes on a rescue mission.
There were no immediate details as to how the sailors were wounded and how the ship was damaged.
