A bath of blood on Asian stock markets today in response to the impact of the US tariffs on Chinese goods. Not the best time to enact a new battle in this widening trade war by the Trump administration as risk markets were already teetering on the edge, with a race to safe havens like Yen and bonds as stocks were dumped everywhere.
The Shanghai Composite gapped more than 3% lower at the open and continued to selloff throughout the afternoon to be down 3.7% or to 3143 points, taking out key support at the 3200 level. The Hang Seng Index fell a similar amount off just over 3% to finish just above 31000 points. While not matching the extreme lows in the first correction phase in early February, this takes out the monthly low, setting up for further falls:
S&P futures are off sharply as well so it looks like a wild night on Wall Street as reaction continues to poor in – everyone is watching the 2600 point level here for signs of a wider correction:
Japanese stocks were the worst hit because of the massive run on Yen for the safe haven bid and of course, the huge impact these tariffs will have on the domestic economy. The Nikkei 225 was flattened by a 1000 point loss to finish nearly 5% lower to 20591 points. Yen strengthened sharply on the morning session and continued throughout the session with the USDJPY pair pushing right through the 105 handle. Parity is my target here:
The ASX200 had the smallest relative impact, only losing just shy of 2% or 116 points lower to 5820 points, taking it through the 200 day moving average but just above the February lows. The Aussie dollar is trying vainly to find a bottom here at the 77 handle, bouncing only as you can see on the four hourly chart, with the potential for a breakdown if risk takes a holiday tonight:
The economic calendar concludes the week with US durable goods orders for February. Have a good weekend!