Monday’s stock selloff on Wall Street extended into Asia on Tuesday as investors pointed fingers at U.S. President Donald Trump whose staunch protectionist policies and sometimes rash decisions have caused a trade war to escalate between the United States and China. The recent selloff was sparked by fears that Trump’s proposed tariffs on over $50 billion of Chinese imports will further shake the markets. The tech sector has lead the slump, breaching a major technical level that analysts worry may signal an end to the nine-year bull market. Amazon, one of the beloved FAANG stocks, was particularly hard-hit after Trump slammed the company on Twitter yesterday. The consumer discretionary sector was also hard hit on Monday, plummeting over 3 percent.
The S&P 500 closed below its 200-day moving average on Monday for the first time since the Brexit vote in 2016, a 2.2 percent decline that signaled more trouble may be looming. In Asia, the Nikkei 225 was down 0.64 percent as of 12:38 p.m. HK/SIN and the Hang Seng Index was down 0.60 percent. All other major Asian indexes were also in the red. The Shanghai Composite slumped 0.93 percent, the Kospi declined 0.44 percent and the ASX 200 was down a modest 0.01 percent, though it struggled to buck the downtrend.
Speaking to CNBC, White House economic advisor Peter Navarro said that if Trump hits all of his economic goals the market will go up. The targets include raising wages and creating a strong manufacturing and defense industrial base. Navarro insinuated that investors may be overreacting with a premature selloff, and he suggested that traders buy on dips.
An unnamed White House official also told CNBC that “we’re focused on long-term fundamentals. We’re not really reacting to market fluctuations.”
The dollar index was up 0.02 percent on Tuesday afternoon in Asia to 90.02 .DXY. The greenback was lower against the euro and the pound, but it managed to find some gains against the yen to trade at 105.92. The dollar was trading at $1.2308 against the euro.