Asia report: Markets weaker on renewed Trump trade war concerns

Markets in Asia finished in the red on Wednesday, as traders once again reacted to political developments in the US, with the ousting of Secretary of State Rex Tillerson and reports the Trump administration was considering further punitive tariffs aimed at China.

In Japan, the Nikkei 225 was down 0.87% at 21,777.29, as the yen strengthened 0.03% against the dollar to last trade at JPY 106.55.

Fresh data showed core machinery orders in Japan were ahead 8.2% month-on-month in January and 2.9% year-on-year, beating forecasts on both measures.

Minutes from the latest Bank of Japan policy meeting were also released, with policymakers agreeing that they needed to “persistently pursue powerful monetary easing”.

Some members, however, pointed out the need to keep tabs on the side effects of its currently stringent policy.

On the mainland, the Shanghai Composite fell 0.57% to 3,291.26, and the smaller, technology-heavy Shenzhen Composite lost 0.89% to 1,878.51.

South Korea’s Kospi was off 0.34% at 2,486.08, while the Hang Seng Index in Hong Kong was 0.53% lower at 31,435.01.

News emerged overnight that Donald Trump’s White House was considering a serious trade package against China, which could include indefinitely-levied tariffs and restrictions on investment.

Reuters cited a source as saying Trump could impose tariffs of as much as $60bn on goods imported from China.

“The real danger is recalcitrant mercantilist instincts descending into trade wars,” noted Mizuho Bank head of economics and strategy Vishnu Varathan.

Oil prices advanced, with Brent crude last ahead 0.52% at $64.98 per barrel and West Texas Intermediate rising 0.87% to $61.24.

In Australia, the S&P/ASX 200 was 0.66% below the waterline at 5,935.30, with all sectors in the red, and the hefty financials subindex falling 0.84%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 fell 0.5% to 8,432.63, following global sentiment at the same time as a number of domestic stocks gave up dividend rights.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.53% at AUD 1.2655 and the Kiwi advancing 0.15% to NZD 1.3652.