Asian stocks fell on Wednesday and currencies were volatile as investors fretted over whether other countries could be targeted for tariffs under incoming U.S. President Donald Trump, a day after he pledged new levies on Canada, Mexico and China.
European equities looked set for a similar fate, with Pan-European STOXX 50 futures losing 0.3%.
Canada’s loonie and Mexico’s peso remained weak following sharp drops to multi-year lows on Tuesday, while China’s yuan edged back towards the previous session’s four-month trough.
However, the New Zealand dollar rebounded from multi-month lows after the country’s central bank opted to cut interest rates by 50 basis points on Wednesday, disappointing some in the market who had bet on a bigger reduction.
The safe-haven yen extended its strong run, climbing to a two-week high on the U.S. dollar, which was in turn weighed down by sagging Treasury yields.
Japan’s Nikkei (.N225) declined more than 1%. The autos sector was the worst-performing industry group (.ITEQP.T) on the Tokyo Stock Exchange, dropping 3.6% as both the threat of tariffs and the drag of a stronger yen weighed on the profit outlook.
Taiwanese stocks (.TWII) lost 1.5%, while South Korea’s KOSPI (.KS11) dropped 0.8%.
However, mainland Chinese blue chips (.CSI300) recovered from early losses to rise by 0.7%, while Hong Kong’s Hang Seng (.HSI) drooped 0.3%.
Weakness in Asian equities contrasted with gains for all three of the major Wall Street bourses overnight. S&P 500 futures pointed to a flat reopen.
Trump posted on his Truth Social platform early in Asia’s Tuesday that he would immediately put a 25% tariff on all products from Mexico and Canada upon taking office, and slap an additional 10% tariff on goods from China. He said those levies would remain until the countries clamped down on issues such as illicit drugs and migrants crossing U.S. borders.
“The theme on the day has been to buy America, and for some to begrudgingly open a Truth Social account, with confirmation that headline risk and the communication channels for price discovery in markets have officially evolved,” said Chris Weston, head of research at Pepperstone.
SOURCE: REUTERS
