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Asian markets rattled by fresh trade concerns

Asian markets rattled by fresh trade concerns

Business Desk Asian markets slipped Tuesday as global trade uncertainty returned to the fore after the United States reimposed tariffs on Argentina and Brazil, threatened steep levies against France and warned China of new measures if ongoing talks are not successful. Optimism that Beijing and Washington will eventually hammer out a partial agreement as part of a wider deal has supported equities for weeks, helping Wall Street to numerous records. But investor sentiment was dealt a blow on Monday when Donald Trump said he would reinstate steel and aluminium tariffs on the two South American countries, which he accused of manipulating their currencies and hurting US farmers. Later, officials warned they would hit France with up to 100 percent in levies on $2.4 billion in goods, saying a digital tax was discriminatory against US tech firms such as Google, Apple and Amazon. Sparkling wine, yoghurt and Roquefort cheese could be hit as soon as next month, while US Trade Representative Robert Lighthizer warned his office was also considering similar moves against Austria, Italy, and Turkey. On Tuesday, France vowed a “strong” response to any sanctions. “Given Brazil was seen as a close friend of Trump and even they could not be exempt from tariffs, there is a notion that every country, regardless of what they do, could have tariffs imposed, which creates a lot of uncertainty of businesses,” said Tapas Strickland at National Australia Bank. Analysts said the moves against Brasilia and Buenos Aires citing currency movements raised the possibility the US could use a similar justification against China, which it has also accused of forex manipulation. Adding to the sense of unease, US Commerce Secretary Wilbur Ross told Fox News that more tariffs on Chinese goods planned for December 15 would be imposed if the first phase of trade talks was not completed by then. “If nothing happens between now and then, the president has made quite clear he’ll put the tariffs in,” he said. Tokyo stocks closed lower on Tuesday as investors locked in profits following declines in American shares, which came under pressure from weak US data and trade worries. The benchmark Nikkei 225 index fell 0.64 percent, or 149.69 points, to 23,379.81, while the broader Topix index was down 0.45 percent, or 7.76 points, at 1,706.73. Shares on Wall Street had dropped overnight after the Institute for Supply Management reported a fourth straight monthly decline in manufacturing sector activity. Before Asian trade, US President Donald Trump announced he would reinstate tariffs on steel and aluminium from Argentina and Brazil, accusing the South American countries of “presiding over a massive devaluation of their currencies” which he said hurt US farmers. The comments added to worries about the US-China trade war, analysts said. “Such negative elements gave investors an excuse to lock in profits,” IwaiCosmo Securities broker Toshikazu Horiuchi told AFP. The dollar fetched 109.16 yen in Asian afternoon trade, against 108.96 yen in New York. In Tokyo, exporters were lower, with Nissan falling 1.46 percent to 678.2 yen and Toyota losing 0.25 percent to 7,718 yen. Market heavyweight SoftBank Group dropped 1.20 percent to 4,185 yen with Uniqlo casual wear operator Fast Retailing down 0.88 percent at 67,200 yen. Hong Kong shed 0.2 percent and Sydney sank more than two percent with investors disappointed that the Australian central bank held off cutting interest rates. Seoul retreated 0.4 percent and Singapore was off 0.6 percent while Manila eased 0.2 percent. Mumbai, Taipei and Jakarta were also down but Shanghai and Taipei both ended with small gains. European shares bounced back on Tuesday from their sharpest decline in two months in the previous session, boosted by technology stocks, but gains were capped as investors grappled with prospects of fresh global trade disputes. Trade-sensitive German shares climbed 0.8 per cent, with help from tech heavyweight SAP and chipmakers, while Italy’s blue-chip index gained 1 per cent after a slew of positive corporate updates. Paris-listed stocks rose only marginally after the US government said on Monday it may impose punitive duties of up to 100 per cent on $2.4 billion in imports from France, including Champagne, handbags and cheese, after concluding that France’s new digital services tax would harm US tech companies. Shares in luxury stocks LVMH, Kering and Hermes fell about 1.5 per cent, with France and the European Union saying they were ready to fight back. “We knew that the US was never going to be happy with France applying a digital services tax,” said Craig Erlam, a senior market analyst at Oanda. “The timing of these things is always a surprise and maybe the fact he set it to a 100 per cent is potentially higher than people were anticipating.” That followed the World Trade Organization rejecting European Union claims that it no longer provides subsidies to planemaker Airbus, prompting the United States to say it could increase retaliatory tariffs on a wider range of European goods. The broader European stocks index, however, rose 0.4 per cent, recovering from their worst selloff since Oct 2. on Monday, following US President Donald Trump’s move to restore tariffs on metal imports from Brazil and Argentina. A set of weak US manufacturing numbers also added to the gloom on Monday, wiping out gains for December in what could have been the STOXX 600 index’s fourth monthly gain in a row. London’s FTSE slipped 0.5 per cent, falling for the fourth straight session as miners, and oil and gas companies took a toll from Trump’s latest tariff threats. Among the bright spots, Italy’s biggest bank UniCredit rose 1.2 per cent after saying it would buy back its stock this year and shed 9 per cent of staff under a new plan to 2023 to cut costs by 1 billion euros ($1.1 billion) in Western Europe. Shares in Italy’s utility company Enel gained 1 per cent after sources reported it had became another bidder, along with France’s Engie and Italy’s ERG to buy Renvico wind farm portfolio in Italy and France. JP Morgan Asset Management strategist Kerry Craig said there were expectations that a “narrow deal around trade can be achieved”. But he added: “While there is a clear economic incentive from both sides to do some sort of deal, the political desire to reach more than the minimum is weak, as the two sides are still going to want to compete in areas such as technology.” The uncertainty over trade, combined with a disappointing US manufacturing report, sent all three main indexes on Wall Street tumbling, while Paris and Frankfurt also suffered big losses. On forex markets, the yen, considered a safe haven in times of uncertainty, rallied higher on Monday against the dollar but pared its gains in early Asian business. Oil prices extended gains ahead of a key meeting of OPEC and other major producers, which is expected to see them maintain output cuts into June, with speculation they could go on until the end of 2020.

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