Washington’s announcement on Friday to implement tariffs on $50 billion of Chinese goods has continued to pressure markets and worry investors. President Trump’s new tariffs included more than 800 strategically important products from China, including automobiles. The tariffs are set to commence on July 6. Beijing responded to the new tariffs by committing to tariffs “of the same scale and strength” and by rendering all previous deals with Trump “invalid.” China’s new round of tariffs will place a 25 percent tariff on 659 products, including seafood and soybeans. Though China’s expanded tariff list included hundreds of new products, Beijing limited the tariffs to $50 billion of U.S. imports. Though many analysts remain optimistic that China’s tariffs won’t seriously harm the strong U.S. economy in the short run, analysts remain concerned that Trump may try to enlist his allies to implement tariffs, which could create a spiral of political and economic concerns.
Asian markets were broadly lower on Monday, with only Australia’s ASX 200 posting modest gains. As of 2:10 p.m. HK/SIN, Japan’s Nikkei 225 was down 0.77 percent, and the Shanghai Composite was down 070 percent. South Korea’s Kospi fell 1.40 percent, and the Hang Seng Index dropped 0.43 percent.
The dollar skirted a seven-month high on Monday after climbing more than 1 percent last week. The greenback gained slightly against the euro, trading at $1.1592, though it fell 0.16 percent against the yen to trade at 110.47. The yen’s gains were supported by an earthquake in the Japanese city of Osaka. The yen tends to act as a safe haven currency in times of political tensions and natural disasters due to Japan’s current account surplus, so the currency’s rise on Monday was largely expected.
Traders are now eyeing the upcoming OPEC meeting which will be held later this week and are waiting for an announcement from Saudi Arabia and Russia about a potential curb of their production cuts which could send oil prices lower. Brent crude futures fell to a six-week low on Monday of $72.45 per barrel before gaining slightly to trade at $72.94 per barrel in the mid-afternoon. U.S. WTI futures dropped 1.60 percent to $64.02 per barrel.