Tokyo: Stocks fall on renewed US-China trade war fears

Passersby are reflected on a stock quotation board outside a brokerage in Tokyo

Passersby are reflected on a stock quotation board outside a brokerage in Tokyo

Most Asian markets except Hong Kong trended modestly higher Monday morning, as new tariffs kicked in on both sides of the ongoing U.S. - China trade dispute and Hong Kong experienced yet another weekend of violence.

The United States slapped 15 percent tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - while China imposed new duties on USA crude, the latest escalation in a bruising trade war.

Wall Street was shut for the Labor Day holiday on Monday, but futures contracts tied to the major indexes were trading and spiked lower. MSCI's All-Country World Index, which tracks shares across 47 countries, was down 0.1% on the day. USA contracts declined in Asia after Bloomberg reported the difficulties the two countries were having in arranging the talks, following Washington's rejection of Beijing's request to delay tariffs that took effect over the weekend. Benchmarks in London, Paris and Shanghai advanced. President Donald Trump's new tariffs on $110 billion in Chinese imports came into effect on Sunday, as did retaliatory levies by China. It said demand was "relatively weak".

At its July meeting, the European Central Bank all but promised to ease policy as the growth outlook worsened. Data compiler IHS Markit said production and new orders continue to fall as confidence hits the lowest level since November 2012. That's the longest buying streak in about 18 months and coincides with an 8.6% drop in the Hang Seng Index.

Chinese shares, however, bucked the bearish trend, with the CSI300 index rising 1.1 per cent despite the trade row escalation.

The currency market was calmer for now, with the dollar down slightly against the yen at 106.12 yen, down 0.13 percent from late U.S. levels.

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USA equity futures have plunged ahead of Tuesday's opening, with the S&P 500 futures losing 1% before later staging a small recovery. But Shanghai rose more than one percent after a better-than-expected reading on Chinese factory activity, though another index showed the sector remained in contraction and investors remain uncertain about the outlook as the trade war bites deeper.

Studies concur Trump's tariffs will cost each USA household up to $1,000 a year in additional expenses.

September is off to a rocky start as markets remain sensitive to the twists and turns on trade with the chances of a resolution between the world's two-biggest economies appearing more out of reach.

Liquidity could be even more limited than usual because of a U.S. market holiday today. "Was anyone surprised by these tariffs that took effect yesterday?" said Takeo Kamai, head of execution at CLSA in Tokyo. Police and protesters clashed in some of the most intense violence since unrest erupted more than three months ago. In Hong Kong, Tencent (0700.HK) gained while Sino Land (0083.HK) and Sands China (1928.HK) slid.

Thousands of protesters blocked roads and public transport links to Hong Kong airport and police made several arrests after demonstrators smashed CCTV cameras and lamps with metal poles and dismantled station turnstiles.

China, eager to quell the unrest before the 70th anniversary of the founding of the People's Republic of China on October 1, has accused foreign powers, particularly the United States and Britain, of fomenting the unrest.

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