Asian stocks are a sea of red on trade war fears
- Trump's tariff plan boosts trade war fears.
- Asian stocks track Wall Street lower.
- European futures signal the weak start.
Asian stocks are reporting losses on Friday as US President Trump's combative action on foreign trade has boosted fears of a full-blown global trade war.
The Shanghai Composite index fell 0.980 percent in early trade and was last seen reporting a 0.33 percent drop. Meanwhile, Japan's Nikkei index suffered a double blow of stronger Yen and broad-based risk aversion and fell 5 percent. Also, stocks in Australia and New Zealand dropped at least 0.25 percent each. Further, the DAX futures and FTSE futures are seen opening on a negative note.
Trump invited steel and aluminum executives to the White House yesterday and said next week he would impose penalties of 25 percent on imported steel and 10 percent on aluminum imports. It is feared that Trump's move would be met by retaliatory action by China, EU and other trading partners.
An all out global trade war will likely boost "bad inflation" (raise prices for consumers) and force central banks to raise rates at a faster rate, thus leading to hard landing. Consequently, the Dow index tanked 500 points yesterday and the Asian stocks are following suit.
The China Iron and Steel Association has labeled Trump's move as a 'stupid protection measure'. Further, the EU and Canada have vowed to take necessary steps as well. So with the trade war" talk in the air, the stocks could remain on the back foot in Europe and US.