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SYDNEY (Reuters) – A massive sell-off of Chinese equities plunged Asian equities into a 14-month low on Monday, as investors expected a deterioration of the Sino-US tariff line after US President Donald Trump Beijing .
Market prices are reflected in a glass on the Tokyo Stock Exchange (TSE) in Tokyo, Japan on February 6, 2018. REUTERS / Toru Hanai
The broadest MSCI share of Asia-Pacific stocks outside Japan slipped 0.9% from July 2017, extending losses compared to last week.
In Europe, however, storytellers announce a more positive start by focusing on the election results in Sweden as the country prepares for a parliament without a voice.
Futures in Eurostoxx 50, Dax in Germany and FTSE in London edged up, while the E-Minis in the S & P 500 were slightly stronger.
Asian investors were nervous after Trump said on Friday that he was ready to impose tariffs on virtually all Chinese imports to the United States, threatening duties on an additional $ 267 billion.
Beijing has warned of retaliation if Washington launches new measures, but it lacks room to match them dollar for dollar, raising concerns over the use of other measures such as weakening the yuan or taking action against US companies in China.
Chinese equities were hit hard, with the benchmark down 1.4%, while Shanghai's SSE composite fell 1.2%. Hong Kong's Hang Seng Index fell 1.3%.
The Japanese Nikkei, which had opened lower, finished up 0.3% after revised data for gross domestic product in the second quarter showed that the world's third-fastest-growing economy since 2016.
Trump, who challenges China, Mexico, Canada and the European Union on trade issues, has now expressed his dissatisfaction with Japan's large trade deficit with Japan.
Asian stock market performance: reut.rs/2PJaLFi
EM risks
Investors are also at the forefront of turbulence-related contagion risks in some emerging markets (EM), including Argentina and Turkey, whose currencies have been recently traded.
Some Asian economies are also vulnerable, Nomura analysts said in a long report with many heavily indebted countries. They also noted a "concentration risk" due to some of the largest investments of the largest funds in the world.
The Indian rupee reached a record high of $ 72.50 per dollar while the Indonesian rupiah – the region's second-worst performance this year – fell 0.4% to near record lows.
"Given Trump's latest comments, investors are likely to see the potential for depreciation of emerging currencies with the trade war even more important," said Nick Twidale, an analyst at Rakuten Securities Australia, based in Sydney.
"Many emerging markets have moved back to historically low levels and investors will continue to monitor the sector closely, with fears of contagion continuing to be a major concern."
Another factor weighing on global markets is the prospect of faster rate hikes from the Federal Reserve after figures released on Friday showed that US job growth has accelerated in the US. August and that wages had increased the most in nine years.
The Fed is almost certain to raise rates a third time this year at the end of September.
The strong employment report boosted the dollar to 95.43 on Friday. The index is up 3.5% so far this year.
Investors will then focus on US inflation for the month of August this August and more could once again boost the dollar.
The Australian dollar, an indicator of emerging market growth, has almost reached its lowest level in two and a half years. The currency fell 1.3% on Friday and was last at $ 0.7115.
The euro held steady at $ 1.15495 after two consecutive sessions of losses as the yen traded in a narrow range, changing hands to 110.96.
On the commodity front, oil prices were firmer after three consecutive days of losses as US crude futures rose 44 cents to $ 68.20 a barrel. Brent futures added 52 cents to $ 77.35 a barrel.
The gold spot was a little sweeter at $ 1,193.01.
Edited by Kim Coghill & Shri Navaratnam
