Asian markets fell in early trading Thursday as U.S.-China trade tensions rose, with President Donald Trump saying China “broke the deal” and China vowing to retaliate if the U.S. raises tariffs on Friday.
The U.S. is set to raise tariffs on $200 billion of Chinese goods to 25% from 10% on Friday. “You see the tariffs we’re doing? Because they broke the deal. They broke the deal,” Trump said at a rally in Florida on Wednesday night. “They can’t do that, so they’ll be paying.” Still, Trump predicted “it will all work out.”
Beijing will be forced to retaliate if the increases go ahead Friday as planned, China’s Commerce Ministry said Thursday. It gave no details of possible penalties. “China deeply regrets that if the U.S. tariff measures are carried out, China will have to take necessary countermeasures,” said a Commerce Ministry statement.
The Wall Street Journal reported Wednesday night that China had been emboldened to take a harder line on trade talks after comments by Trump — specifically, his attacks on Fed Chairman Jerome Powell to cut interest rates, which China reportedly interpreted as a sign of weakness in the U.S. economy, and a signal that the U.S. was ready to compromise.
China’s Vice Premier Liu He will lead a delegation for ongoing trade talks in Washington on Thursday and Friday, and it is believed to be possible that a final trade deal can still be reached.
On Wall Street, a late-afternoon reversal added to the market’s losses following a steep sell-off a day earlier as investors worry that the costly trade dispute between the world’s two biggest economies will escalate. The S&P 500 index
fell 4.63 points, or 0.2%, to 2,879.42. The benchmark index had been up 0.5%. The Dow Jones Industrial Average
inched up 2.24 points, or less than 0.1%, to 25,967.33. The Nasdaq composite
dropped 20.44 points, or 0.3%, to 7,943.32.
fell 1.2%, and Hong Kong’s Hang Seng Index
slipped 1.7%. The Shanghai Composite
declined 1.4% while the smaller-cap Shenzhen Composite
dipped 1%. South Korea’s Kospi
dropped 1.2%, and benchmark indexes in Taiwan
all sank. Australia’s S&P/ASX 200
was one of the few gainers, up 0.3%.
Among individual stocks, Yahoo Japan
soared after SoftBank Group
said it will spend $4 billion to increase its stake in the company. Rakuten
fell in other Tokyo trading. In Hong Kong, food processor WH Group
sank, along with tech firms AAC
and Sunny Optical
and China Life Insurance
. Chip maker SK Hynix
dropped in South Korea and Foxconn
slid in Taiwan. Beach Energy
and Oil Search
rose in Australia.
“The pressure looks to continue amid the trade concerns found within the market with heightened volatility a new normal this week,” said Jingyi Pan, market strategist with IG in Singapore.
The U.S. and China have raised tariffs on tens of billions of dollars of each other’s goods in their dispute over U.S. complaints about China’s technology ambitions and practices. Investors have been anticipating a deal throughout this year, which contributed to double-digit gains in all the major indexes. But the latest tough talk is raising anxiety and casting more doubt about a resolution.
Benchmark U.S. crude
fell 63 cents to $61.49 a barrel. Brent crude
, the international standard, lost 69 cents to $69.69.
slipped to 109.89 yen from 110.06 yen.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.