Asian stock indexes were trading mostly lower on Monday, with benchmark indexes pressured by reports that factory activity in Asia contracted in most countries in May, a decline that signals that a global recession may be looming. Analysts are concerned that in addition to the hard data that has been released, expectations of declines in further months are highly plausible, owing to the continuing trade tensions between the United States and China. The trade tariffs resulting from the trade war have already started to impact consumer sentiment to the downside, and, according to many American businesses, higher prices on products that are supposed to come cheaply from China.
Japan’s Nikkei 225 was down 1.09 percent as of 2:05 p.m. HK/SIN on Monday. Australia’s ASX 200 also suffered steep losses, down 1.02 percent in the mid-afternoon. China’s Shenzhen Composite was down 0.41 percent, though the Shanghai Composite was trading flat. South Korea’s Kospi gained 1.06 percent to start the trading week, enjoying the only gains in a sea of losses.
According to a report published by CNBC, American companies are complaining that they are footing the bill for President Trump’s tariffs, since they are paying the taxes to customs officers when the products arrive from China. However, President Trump maintains that the Chinese will eventually pay for these tariffs, since they will be forced to lower their prices in order to remain competitive, a decision which would lower their profit margins and harm the Chinese economy. Still, analysts argue that this phenomenon will take time to percolate, and that until then, the increased expenses is likely to take a toll on the U.S. economy.
Currency Movements
The dollar was under pressure on Monday as traders sought safe-haven assets. The dollar eased 0.04 percent against the yen to 108.23. It also eased against the British pound and the euro. The dollar index was down 0.05 percent to 97.70 .DXY. Gold prices were higher, largely due to renewed concerns about the future of the global economy. The precious metal was up 0.35 percent to $1,315.70 per ounce.