Asian shares tumbled on Tuesday after US President Donald Trump stunned the markets with tariffs against imports from Brazil and Argentina, recharging fears about global trade tensions, while weak US factory data added to the investor gloom.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.37 per cent, with Australian shares dropping more than 2 per cent, on track for their worst day in two months.
China’s blue-chip CSI300 index fell as much as 0.62 per cent before clawing back to end the morning session flat. Japan’s Nikkei shed 0.61 per cent.
In tweets on Monday, Trump said he would impose tariffs on steel and aluminium imports from Brazil and Argentina, attacking what he saw as both countries’ “massive devaluation of their currencies.”
Contrary to his remarks, both Brazil and Argentina have been trying to strengthen their respective currencies against the dollar.
Steven Daghlian, market analyst at CommSec in Sydney, said while the South American tariffs dominated market worries on Tuesday, China’s response to the US supporting anti-government protesters in Hong Kong has also chilled sentiment.
“Markets are extremely sensitive to any good or bad news on the US-China dispute front, but also the US relationship with other nations as well,” he said.
China said on Monday US military ships and aircraft won’t be allowed to visit Hong Kong, and also announced sanctions against several US non-government organisations for encouraging protesters to “engage in extremist, violent and criminal acts.”
Worsening the mood, data from the Institute for Supply Management (ISM) showed the US manufacturing sector contracted for a fourth straight month in November as new orders slid.
That erased the market cheer from upbeat Chinese factory surveys released over the past few days.
While trade war headlines have been a key driver of markets in recent weeks, sentiment has broadly held up. The US S&P 500 index,