Asian stocks slumped to nine-month lows on Thursday as investors worried that the Trump administration's approach to trade is harming global economic growth.
TOKYO: Asian stocks began the week on the back foot in the wake of trade-war jitters from US moves against Mexico and India to China’s retaliation against American measures. The yen held near a six-month high.
U.S. futures retreated and equities in Tokyo slumped, with losses more modest in Korea and Australia.
The yield on 10-year Treasuries slipped to 2.12% early Monday. Stocks are reeling and bonds rallying after the Trump administration threatened Mexico with tariffs over immigration concerns late last week.
China implemented tariff hikes Saturday and announced it will take action against "unreliable” foreign companies, with a list of violators pending. Crude oil continues to slide amid global demand worries, trading near $53 a barrel.
May marked a brutal month for just about every asset class except bonds, with money managers seeking out the relative safety of Treasuries.
As June began, China said it really doesn’t want a trade war but won’t shy away from one. Also, China is investigating FedEx because the company failed to deliver items to the correct addresses, possibly a reaction to reports that packages destined for Huawei were redirected to the U.S.
"Trade is a tail risk that’s becoming bigger by the day,” Jun Bei Liu, a portfolio manager at Tribeca Investment Partners, told Bloomberg TV in Sydney. "Investors right now are looking more at capital preservation before stepping into buy.”
India became the latest country to be targeted by the Trump administration Friday evening, eliminating the country’s eligibility to export a number of products to the U.S. duty-free.
Traders have gotten so gloomy on the growth outlook that they’re betting the Federal Reserve will cut its target rate by a half-percentage point by year-end.
Meantime, Morgan Stanley forecast a global recession is brewing and could begin in as soon as nine months if Trump pushes to impose 25% tariffs on additional $300 billion of Chinese imports and China retaliates. - Bloomberg
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