Asian markets were mostly lower early on Monday morning as traders braced for a busy week ahead. Japan’s Nikkei 225 was down 0.09 percent as of 10:33 a.m. HK/SIN and both China’s Shanghai Composite and South Korea’s Kospi were down just over 0.50 percent. Australia’s ASX 200 and Hong Kong’s Hang Seng Index managed to trade higher, with the Hang Seng Index off to a strong start after gaining 1.61 percent early in the trading session.
A handful of manufacturing data is due out later on Monday throughout the world and the U.S. ISM report will be released on Tuesday. Also poised to rock markets are the tariffs that will come into effect later this week. On July 6th China is expected to roll out a 25 percent tariff on U.S. soybeans as well as pork and dairy. Mexico will be joining in on several of these tariffs starting on July 5th. Canada has also announced new taxes on U.S. imports including beef, orange juice, yogurt, soup, maple syrup and whiskey. Canada and Mexico, along with the European Union, have imposed the tariffs as a direct response to U.S. President Trump’s strict implementation of tariffs upon imported steel and aluminum which he claimed were necessary for reasons of “national security” despite his public protectionist views.
As a country that relies heavily on its farm economy, hitting U.S. agricultural exports could have a swift impact on the U.S. economy. Chinese economists knew exactly this when selecting items to add to its tariff list, which is now comprised heavily of agricultural products. China alone purchases nearly half of U.S. soybean exports which is valued at nearly $14 billion per year. China is also one of the world’s largest consumers of pork, and much of it comes from the U.S.
Despite concerns about tariff impacts on the U.S. economy, the dollar was broadly higher on Monday morning. The greenback was trading at $1.1659 against the euro and at 110.96 against the yen, a 0.27 percent increase. The dollar index was up 0.13 percent to 94.71 .DXY.