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Asian Shares Tumble as Trump Threatens Higher Tariffs

James Hyerczyk

The major Asia Pacific stock indexes are trading lower on Wednesday in response to a threat by U.S. President Donald Trump to raise tariffs on Chinese goods if the two economic powerhouses do not strike a deal.

In other news, the People’s Bank of China (PBOC) released its new loan prime rates. In Japan, the Ministry of Finance reported a greater-than-expected drop in exports and civil penalty orders against Westpac shook up the Australian banking sector.

At 06:49 GMT, Japan’s Nikkei 225 Index is trading 23148.57, down 144.08 or -0.62%. Hong Kong’s Hang Seng Index is at 26880.67, down 213.13 or -0.79% and South Korea’s KOSPI Index is trading 2125.32, down 27.92 or -1.30%.

China’s Shanghai Index is trading 2913.28, down 20.71 or -0.71% and Australia’s S&P/ASX 200 is at 6722.40, down 91.80 or -1.35%.

Trump Threatens Higher Tariffs

During a meeting with his Cabinet on Tuesday, President Donald Trump threatened higher tariffs on Chinese goods if that country does not make a deal on trade. Trump’s comment is likely a response to reports that the two economic powerhouses have reached an apparent stalemate in trade negotiations that have lasted nearly two years.

“If we don’t make a deal with China, I’ll just raise the tariffs even higher,” Trump said in the meeting.

China Cuts Interest Rate Slightly

China on Wednesday made a slight cut to a key interest rate, the latest in a series of small, incremental steps to loosen monetary policy and support economic growth, reports the South China Morning Post.

The People’s Bank of China (PBOC), the country’s central bank, cut its one-year Loan Prime Rate (LPR) by 5 basis points on Wednesday and ordered state-owned lenders to align their loan rates to that benchmark, a move that was widely expected. The November loan prime rate, the average of the rate that 18 selected commercial banks charge their best customers, was set at 4.15 percent for one-year maturities, down from 4.20 percent a month earlier, the PBOC said.

Japan’s Exports Post Worst Fall in 3 Years

Japan’s exports tumbled at their quickest pace in three years in October, threatening to tip the trade-reliant economy into recession as weakening demand from the United States and China darkened the outlook, according to Reuters.

Official data out on Wednesday showed Japan’s exports fell 9.2% year-on-year in October, a bigger decline than the 7.6% drop expected by economists in a Reuters poll.

The data comes after a preliminary reading of gross domestic product last week showed Japan’s economy post the worst growth in a year in the third quarter.

The Japanese government has said it plans to compile a stimulus package as soon as possible as a pre-emptive measure against heightening overseas risks.

Australian Banking Sector Dives

A 2% drop in the financial subindex helped drive the S&P/ASX 200 Index down 1.4% on Wednesday after Australia’s anti money-laundering and terrorism financing regulator filed for civil penalty orders against Westpac, one of the so-called Big Four banks.

“It is alleged that Westpac’s oversight of the banking and designated services provided through its correspondent banking relationship was deficient,” the Australian Transaction Reports and Analysis Centre (AUSTRAC) said in a media release.

This article was originally posted on FX Empire

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