Asian stock markets slipped Friday after Beijing vowed to fight the Trump administration’s latest threats of yet more tariffs on Chinese imports, intensifying investor fears about a brewing trade battle between the world’s two biggest economies.
KEEPING SCORE: Japan’s benchmark Nikkei 225 index dipped 0.4 percent to 21,567.52 while South Korea’s Kospi slipped 0.6 percent to 2,422.98. Australia’s S&P/ASX 200 was flat at 5,788.70, but Hong Kong’s Hang Seng rose 0.9 percent to 29,782.58 after trading resumed following a holiday as investors caught up with the previous day’s global gains. Singapore’s share index rose while those in Indonesia, the Philippines and India fell. Mainland Chinese markets remained closed for a holiday.
TRADE TIFF: Tensions in the U.S.-China trade dispute stepped up a notch after President Donald Trump instructed the U.S. trade representative to consider slapping an extra $100 billion in tariffs on Chinese goods. China responded by indicating it wouldn’t back down, saying it would fight back “at any cost,” according to a statement from the Commerce Ministry. The surprise move was a further escalation of the deepening trade dispute between the world’s two biggest economies, which just days earlier announced plans for $50 billion in import duties on each other’s goods. The tariff threats had roiled financial markets but they had rebounded by Thursday on investor hopes the U.S. and China indicated would find a diplomatic solution. Futures contracts for the Dow and S&P 500 indexes lost more than 1 percent, indicating Wall Street was poised to open sharply lower while the yen and gold, traditional havens for investors, ticked higher.
MARKET INSIGHT: “Our view remains that a negotiated solution is most likely and so the tariffs ultimately won’t be implemented or will be much milder if they are,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney. “However, negotiations could take months. In the meantime, there will be ongoing noise around the issue” and financial markets will remain volatile, he said.
OUTLOOK: Investors are awaiting the latest monthly U.S. jobs report due later Friday, which will provide the latest insight into the state of the world’s No. 1 economy. Economists forecast that American employers added 185,000 jobs in March, pushing the unemployment rate down to 4.0. Market moving events next week include Wednesday’s release of Federal Reserve minutes, which could provide fresh clues on the timing of future rate increases, and Chinese export data on Friday, an indication of global demand for the world’s No. 2 economy.
WALL STREET: Major U.S. benchmarks ended higher. The S&P 500 index climbed 0.7 percent to 2,662.84. The Dow Jones industrial average rose 1 percent to 24,505.22. The Nasdaq composite added 0.5 percent to 7,076.55.
ENERGY: Benchmark U.S. crude fell 50 cents to $63.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 17 cents to settle at $63.54 a barrel on Thursday. Brent crude, used to price international oils, lost 54 cents to $67.79 per barrel in London.
CURRENCIES: The dollar slipped to 107.34 yen from 107.40 yen The euro rose to $1.2232 from $1.2241.