US tariffs on Chinese imports are set to kick in on Friday. Asian investors are fearful that a full-on trade war between the US and China will slam the breaks on growth. That’s why investors continue to stampede out of Asian stocks.
A quick rundown of the market action across Asia bears this out:
- The Shanghai Composite Index is down 0.91% today. Moreover, this index is down a hefty 12.2% over the last month and is officially in a bear market;
- Japan’s NIKKEI 500 Index fell 1.41%. This index is down 6.45% over the last month;
- Hong Kong’s Hang Seng Composite Index dropped 0.33% and is now down 10.8% in the last month;
- South Korea’s KOSPI Index is down 0.35% today. It’s down about 8% over the last month.
The next couple of days will be important for Asian stock markets as they wait on tariffs and counter-tariffs. Any further escalation in the burgeoning trade war will pressure Asian markets.
Pre-market Update: The US and Europe Remain Unscathed by Trade War Fears
Investors in the US and Europe seem to have disregarded fears of a fall out from a US-China trade war. European shares are trading higher for the most part.
The German DAX Index is up a healthy 1.15%. The French CAC 40 Index has climbed 0.88% so far today. The UK’s FTSE 100 Index is up a modest 0.45%. Even the Euro is up a half percent against the US dollar.
Much of this optimism is driven by strong German economic data. Industrial orders bounced back in May with a stronger-than-expected jump after four consecutive monthly drops. Demand from domestic customers and the rest of the Euro Zone picked up.
US Futures are also off to a strong start in the pre-market. The S&P 500 futures point to a 0.59% rise. The tech-heavy NASDAQ futures are up about 0.62%.
The Fed will release minutes of its June meeting today. Investors are looking for clues on whether it is still on track to raise interest rates twice more this year.
Monthly payrolls data follow on Friday. Investors will also be on the lookout for further developments in the brewing trade war.