The United States’ announcement that it will slap tariffs on European imports worth $7.5 billion pushed Asian stocks lower on Thursday.
MSCI Asia-Pacific Index, Japan’s Nikkei, and Australian shares dropped 0.78 percent, 2.20 percent, and 2.13 percent, respectively.
Meanwhile, the US stocks added 0.25 percent. But the three major New York share indexes all lost more than 1.5 percent. This caused the Wall Street to suffer its sharpest one-day decline in nearly six weeks.
Approved by the World Trade Organization, the U.S. on Wednesday announced its plan to impose tariffs on European Union goods. It will levy 10 percent on aircraft and 25 percent on other goods including wine, whiskies, and cheese.
In 2018, president Trump slapped tariffs on steel and aluminum coming from EU.
Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management Co in Tokyo, showed concern that the additional tariffs could be a source of tension between the U.S. and the EU.
“The US economy is finally starting to slow, because of trade friction and problems in the manufacturing sector,” he said. “People in the markets want to see if this leads to weaker job growth.”
The two-year yield fell to 1.4680 per cent, approaching a two-year low of 1.4280 per cent, after a weak US private sector jobs report depressed boosted expectations that the Federal Reserve will cut interest rates this month.
Fed Cut
The CME FedWatch tool revealed that from 39.6 percent on Monday, traders now see a 74.9 percent chance that the Federal Reserve will cut rates by 25 basis points to 1.74-2.00 percent in October. This could further if US non-farm payrolls due on Friday show weakness in the labor market.
In Hong Kong, shares lost 0,6 percent due to continued protests across the city.
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