TOKYO (Reuters) – Wall Street stock markets weakened in early trading on Monday, setting a tough tone for Asian markets after US-China tariffs came into effect, bolstering investors' gloomy expectations of global growth prospects.
A trader working on the floor of the New York Stock Exchange (NYSE) in New York, USA, August 14, 2019. REUTERS / Eduardo Munoz
E-mini futures for US S & P500 ESc1 fell as much as 1.06 % in early trade and last reached 0.68% at 2,905 while Chicago-traded Nikkei futures NIYcm1 suggest Japan's Nikkei .N225 is on course to fall 0.7%.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS, which lost 4.7% last month, is likely to remain under pressure.
The United States dropped 15% tariffs on a number of Chinese goods on Sunday – including footwear, smart watches and flat-screen TVs – while China imposed new tariffs on US crude, the latest escalation in a blue trade war.
A number of studies suggest that tariff rates will cost US households up to $ 1,000 a year, and the latest round will hit a significant number of US consumer goods.
In retaliation, China began imposing additional tariffs on some of the US goods on a target list of $ 75 billion. Beijing did not specify the value of goods meeting higher tariffs from Sunday.
Many market participants say that the market's reaction was probably exaggerated by algorithmic players' flow in thin trading conditions at the start of Asian trading on Monday.
Liquidity may be even more limited than usual due to a US market holiday on Monday.
“(The Market Movement) shows you how many data mining algae are involved in equity compared to the forex link. Was anyone surprised by these tariffs that went into effect yesterday? "Said Takeo Kamai, head of execution at CLSA in Tokyo.
Despite the volatility, the move reflects lower investors' underlying concerns about rising costs for the US trade war for the global economy.
An official survey published on Saturday showed that factory activity in China shrank in August for the fourth consecutive month, further evidence that the world's second-largest economy was hit by the trade war.
Tensions are also high in Hong Kong, with police and protesters clashing with some of the most intense violence since the turmoil erupted more than three months ago, as Beijing's concern undermines democratic freedom in the territory.
Thousands of protesters blocked roads and public transport links to Hong Kong Airport and police made several arrests after protesters smashed CCTV cameras and lamps with metal poles and dismantled the station's screens.
China, eager to stop the unrest before the 70th anniversary of the founding of the People's Republic of China on October 1, has accused foreign powers, especially the United States and the United Kingdom, of stirring up the unrest.
Oil prices also traded early Monday.
Futures for BrCO crude oil LCOc1 fell 0.68% to $ 58.85 barrel while US West Texas Intermediate (WTI) crude oil CLc1 lost 0.54% to $ 54.80 per barrel.
The foreign exchange market was quieter for now, with the dollar down slightly to the yen at 106.12 yen JPY =, down 0.13% from the late US level.
The euro was almost flat at $ 1.09905 = not far from the two-year low of $ 1.0963 in US trade on Friday.