Asian stocks were trading lower on Thursday after new trade threats from China stoked new fears that the trade war between the United States and China will be long, and perhaps, brutal. China’s Vice Foreign Minister Zhang Hanhui accused Washington of “economic terrorism, economic chauvinism, economic bullying,” while China’s People’s Daily, the official newspaper of the Communist Party, used the provocative phrase “don’t say we didn’t warn you,” to reflect China’s willingness to strike back against U.S. tariffs, sanctions, or other punitive actions. The phrase was previously used prior to the China-Vietnam War in 1979, and hints to the fact that strong, swift action may lie ahead.
In addition to using veiled threats, China also threatened to block the use of its rare earth minerals in response to Washington’s trade war escalation. The minerals are critical to the production of weapons, electric cars and iPhones, among other things. The recent escalation in the U.S-Sino trade war has poised U.S. stock markets for their first negative month of the year. All U.S. benchmark indexes closed lower on Wednesday. The S&P 500 is down nearly 6 percent this month.
Asian markets were close behind, suffering losses almost across the board on Thursday.The Shenzhen Composite saw the steepest losses, falling 1.13 percent as of 1:28 p.m .HK/SIN. The Shanghai Composite was down 0.70 percent. Japan’s Nikkei 225 was down 0.41 percent, and Australia’s ASX 200 eased 0.85 percent. Only South Korea’s Kospi managed to eke out gains, trading up 0.45 percent in the early afternoon.
Oil prices hit a three-month low on Wednesday on fears that an extended trade war would wreak havoc on the global economy and decrease demand. Yet despite these fears, oil prices rose slightly on Thursday after reports out from the U.S. showed that inventories increased more than analysts expected. Brent crude futures were up 0.37 percent to $69.71 per barrel and U.S. WTI futures were up 0.65 percent to $59.19 per barrel.