This past weekend was meant to be the celebration of a trade deal between the United States and China, but in a sudden turn of events, Friday saw an escalation of the trade dispute as U.S. President Donald Trump raising tariffs on $200 billion of Chinese goods after he accused Beijing of breaking the trade deal and compromising the negotiations. On Sunday the two global economic leaders appeared to be in a deadlock; “no one should expect China to swallow bitter fruit that harms its core interests,” said Chinese leaders in a release that was set to be published on Monday.
According to White House economic advisor Larry Kudlow, the trouble spot in the negotiations is Beijing’s hesitancy to pass into law the provisions that had been previously agreed to. Investors are now preparing for expected countermeasures from China and are shying away from riskier assets as they wait to see what happens next.
Japan’s Nikkei 225 shed 0.84 percent as of 2:02 p.m. HK/SIN, continuing the steep decline it started last week. Earlier in the session the index fell as much as 1 percent to hit its lowest level since March 28. South Korea’s Kospi was down 1.24 percent and both of China’s benchmark indexes were down over 1 percent, with the Shanghai Composite down 1.01 percent and the Shenzhen Composite down 1.02 percent, a slight improvement from its loss of 1.9 percent earlier in the session. Only Hong Kong’s Hang Seng Index bucked the trend, trading up 0.84 percent in the mid-afternoon.
There are no more trade talks on the immediate horizon, though rumors have been swirling that President Trump will meet with Chinese President Xi Jinping at the G20 summit in Japan next month.
The dollar index remained unchanged on Monday afternoon in Asia, even as the yen enjoyed moderate buying. The greenback eased 0.24 percent against the yen to trade at 109.70. It Gained modestly against the euro and the Australian dollar.