Asian Stocks Decline Amid Trump’s Tariff Woes

While bonds and stocks reported incessant selloffs, the dollar extended its losing streak falling as much as three-year low.

A slew of Asian stocks is on the verge of decline for the third-consecutive week as US President Donald Trump went ahead to impose 145% tariffs on Chinese products. US Treasuries witnessed a selloff from earlier in the week. S&P 500 declined by 1%. Investors are looking forward to investing in havens and non-US alternatives. While the Euro soared by 1.6%, yen and gold touched their all-time-high.

Though financial markets reacted positively after President Donald Trump’s decision to delay some of his sweeping tariffs, the selloff highlighted increased tensions with China.

“The repeated changes in President Trump’s tariff stance has undermined investor confidence in the US government and economy,” said Carol Kong, a strategist at Commonwealth Bank of Australia. “The selloffs in US equities, bonds and the dollar suggest market participants are reallocating their portfolios away from US dollar assets.”

Bloomberg Dollar Spot Index closed down 1.5% at the end of trading in New York Thursday. The Korean won and the Thai baht surged against the dollar. A gauge of EM currencies rose about 0.6%, on pace for its best day since August.

Since October, gains for the yen shot the Japanese currency to around 143 per dollar on Friday,

“We still believe the anxiety around tariffs are alive and well,” said Nathan Thooft at Manulife Investment Management. “The path forward likely includes more market swings as we do not have a conclusion. In fact, we have the opposite, a likely extension of the tariff negotiation process.”

Shares in China and Hong Kong slipped on Friday after they gained in the prior session on expectations the government will come out with more economic stimulus. The country's top leaders were due to meet in Beijing to discuss the measures. Japan’s Topix fell 4.4%, while Nikkei slipped as much as 5.4%.

“The Trump administration’s stance has evolved from an all-out trade war against everyone, to a concentrated trade war against China,” said Nicolas Oudin of Gavekal Research. “Most investors believe that China shot itself in the foot by retaliating. The view from Beijing is different. Many in China read the ‘Trump fold’ as a sign of US weakness, and therefore as a validation of China’s decision to escalate.”

The 10-year Treasury yield surged by six basis points adding to the nine on Thursday as investors continued to sell down holdings of the debt.

The tariff concerns can also jolt corporate earnings. Audi has suspended deliveries to the US, while bigger-than-expected import tax has also prompted Japan’s Nintendo Co. to delay pre-orders for its long-awaited Switch 2 gaming console.

On Friday oil was trading lower, while gold reported notable gains. Bitcoin went down by around $79,600.