Asian stocks on Friday extended the slide seen in the U.S. and Europe after the Trump administration launched a trade broadside against China.
Although the import tariffs had been telegraphed for weeks, Thursday’s package nonetheless sent investors into safe havens, with bonds and gold prices rising and the yen hitting its highest level against the dollar since Donald Trump’s election win.
Japan’s Nikkei Stock Average NIK, -3.51% led the way lower in early trade with a 3% slump as the yen rose sharply against other currencies Thursday.
The yen rallied further in Asian trading, with the dollar JPYUSD, +0.329734% dropping to ¥104.95 versus ¥105.28 in late New York trading Thursday.
Stocks in Hong Kong HSI, -2.97% and Shanghai SHCOMP, -2.59% were down more than 3% in early trading. Korea’s Kospi SEU, -2.28% opened down 1.9%, with Samsung Electronics 005930, -2.94% falling 2.4%. Indexes in New Zealand NZ50GR, -1.21% and Australia XJO, -1.96% were down about 1.5%.
Asian companies, many of which are export-reliant, could get caught in the middle of tit-for-tat trade actions between the U.S. and China.
“It looks like trade wars are here to stay,” said Stuart Ive, private client manager at OM Financial. “And it doesn’t help that the revolving door at the White House continues to rotate.”
He added that what was new in Thursday’s announcement was who received U.S. trade favors.
“Clearly the EU got an exception in the 12th hour on tariffs on their steel — which was a surprise — and that really does throw the focus back to China,” said Ive. With “load of tariffs” against China now confirmed, that country “has basically come out and said they will fight to the last man standing.”
S&P 500 futures were down 0.4% after Thursday’s 2.5% skid for the U.S. stock benchmark, and U.S. Treasurys have rallied further. The 10-year yield is down at 2.81%. It hit 2.93% Wednesday during Federal Reserve chief Jerome Powell’s press conference after the central bank’s meeting.