Asia report: Markets red across the board amid ongoing trade war

In Japan, the Nikkei 225 was down 0.65% at 20,585.31, as the yen weakened 0.42% against the dollar to last trade at JPY 106.40.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.54%, fashion firm Fast Retailing lost 1.12%, and technology conglomerate SoftBank Group was 2.91% lower.

The broader Topix index was 0.44% weaker by the close of trading in Tokyo, settling at 1,499.23.

On the mainland, the Shanghai Composite was 1.56% weaker at 2,777.56, and the smaller, technology-heavy Shenzhen Composite fell 1.78% to 1,490.30.

South Korea’s Kospi was off 1.51% at 1,917.50, while the Hang Seng Index in Hong Kong lost 0.67% to settle at 25,976.24.

The blue-chip technology stocks were both in the red in Seoul, with Samsung Electronics down 1.02%, and chipmaker SK Hynix plunging 4.51%.

Sentiment was negative once again at the start of the Asian day, as China confirmed it was suspending the purchase of agricultural products from the United States in response to the latest tariff move from the Trump administration.

Last week, the White House surprised global markets by slapping a fresh 10% tariff on $300bn of Chinese imports, starting 1 September, just days after the latest round of trade negotiations between the world’s two largest economies concluded.

Currency movements were also in focus as part of the trade dispute, after the People’s Bank of China set the onshore yuan’s loose peg at CNY 6.9683, seeing that version of renminbi trade at more than CNY 7 against the dollar.

The central bank allows the onshore yuan to trade within 2% either side of the midpoint it sets on a daily basis.

Overnight, the US Treasury Department officially designated the People’s Republic as a ‘currency manipulator’, although a number of analysts were unsure whether such a move would stick.

“In theory, yuan depreciation is a normal response to the slowing Chinese economy and declining exports, after the US imposed tariffs on $250bn worth of Chinese goods thus far, and $300bn worth of goods … from September onward,” said London Capital Group senior market analyst Ipek Ozkardeskaya.

“China will release its July trade data later this week, and the trade surplus is expected to have narrowed to $42.65bn from $50.98bn printed a month earlier.”

Ozkardeskaya said one thing was “sure”, in that the falling yuan was adding fuel to the fire in the White House.

“Donald Trump increases the pressure on the Federal Reserve for lower interest rates.

“The US dollar index [has] tumbled by 1.75% since the beginning of August.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.38% at $60.04 per barrel, and West Texas Intermediate ahead 0.55% at $54.99.

In Australia, the S&P/ASX 200 slid 2.44% to close its session at 6,478.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 fell 1.7% to finish at 10,587.17.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.45% at AUD 1.4732, and the Kiwi strengthening 0.32% to NZD 1.5266.