Asian Shares Mostly Lower on Negative Trade Developments; Aussie Market Plunges More than 2%

The major Asia Pacific stock indexes fell Tuesday following renewed concerns over slower global growth. The catalysts behind the selling pressure were negative trade developments overnight, fueled by U.S. President Donald Trump’s decision to reinstate tariffs on U.S. steel and aluminum imports from Brazil and Argentina. Shares in Australia posted the biggest loss with its major index dropping more than 2%.

At 06:46 GMT, Japan’s Nikkei 225 Index is trading 23379.81, down 149.69 or -0.64%. Hong Kong’s Hang Seng Index is at 26384.05, down 60.67 or -0.23% and South Korea’s KOSPI Index is trading 2084.23, down 7.69 or -0.37%.

In China, the Shanghai Index is trading 2880.04, up 4.23 or +0.15%. Australia’s S&P/ASX 200 Index closed at 6712.30, down 150.00 or -2.19%.

Escalating Trade Fears

U.S. President Donald Trump’s decision to restore tariffs on Brazil and Argentina metal imports is raising new trade tensions and shaking up the global equity markets early Tuesday. The U.S. Trade Representative also said on Monday that it could slap tariffs of up to 100% on certain French products.

President Trump said in a tweet on Monday:  “Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.”

US-China Trade Deal Worries Continue

Uncertainty over whether the U.S. and China would sign a trade deal before the end of the year remained at the forefront on Tuesday. Trump failed to ease tensions when he said on Monday China still wants to make a deal on trade, “but we’ll see what happens.”

Doubts have been increasing after a week that presented no fresh development except rising tensions after Trump signed two pieces of legislation supporting pro-democracy protesters in Hong Kong. China countered the move by saying it will take “strong counter-measures” against Washington.

Reserve Bank of Australia Keeps Rates on Hold

The RBA said Tuesday it was keeping its main cash rate at a record low of 0.75%, a move that was in line with expectations from most analysts in a Reuters poll. The Australian central bank has slashed its benchmark rate three times since June this year.

“The easing of monetary policy this year is supporting employment and income growth in Australia and a return of inflation to the medium-term target range,” said RBA Governor Philip Lowe said in a statement.

Aussie Shares Tumble

The Australian share market suffered its worst day since mid-August on renewed fears over global trade uncertainty. The sell-off wiped on $50.8 billion in value from the market and was the largest single-day drop since a 187.8 point loss on August 15.