Asia report: China sell-off leads region lower

Markets in Asia were in the red at the end of the day on Tuesday, led by a tumble in mainland China after US president Donald Trump fired his latest shot in the ongoing trade tiff between Washington and Beijing.

In Japan, the Nikkei 225 fell 1.77% to 22,278.48, as the safe-haven yen strengthened 0.62% against the dollar to last trade at JPY 109.87.

In corporate news in Tokyo, Fujifilm Holdings filed a lawsuit against Xerox, after Xerox ditched a proposed merger between the two firms in May.

Shares in Fujifilm were down 1.56%.

On the mainland, the Shanghai Composite plunged 2.82% to 2,906.43, and the smaller, technology-heavy Shenzhen Composite plummeted 5.77% to 1,594.05.

South Korea’s Kospi was off 1.52% at 2,340.11, while the Hang Seng Index in Hong Kong was 2.78% lower at 29,468.15.

Sentiment took a huge hit after Trump said on Monday that he had asked officials to identify $200bn worth of Chinese imports that would be subject to an additional 10% tariff.

The president said in his statement that those tariffs would be implemented if China refused to “change its practices”.

In response, Chinese officials said they would implement retaliatory measures if Washington goes ahead with its plan.

“The tit for tat brings the two sides closer to a trade war,” noted Oxford Economics head of Asia economics Louis Kuijs.

“The Trump administration appears to think it can strong-arm China in making concessions by scaling up the amount of trade it imposes tariffs on.

“However, China is adamant about not wanting to look weak in this conflict with the US.”

Oil prices fell, with Brent crude last down 0.53% at $74.94 per barrel, and West Texas Intermediate off 1.48% to $64.89.

In Australia, the S&P/ASX 200 was just 0.03% lower at 6,102.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 1.2% at 8,863.24.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.78% at AUD 1.3575, and the Kiwi retreating 0.63% to NZD 1.4504.