Nikkei drops 1% as dollar extends losses; rest of Asia trades lower

  • Asian stocks declined on Monday, with Japan’s Nikkei 225 taking a hit amid the weaker dollar.
  • The greenback was on the back foot after U.S. President Donald Trump doubled down on his criticism of global monetary policy and the Federal Reserve last week.
  • Trump’s comments on putting tariffs on $500 billion in Chinese imports were largely shrugged off by U.S. markets last week in the wake of strong earnings.

Asian shares declined on Monday, with Japanese stocks pressured by weakness in the dollar after the currency dropped on U.S. President Donald Trump’s criticism of the Federal Reserve.

The Nikkei 225 dropped 0.98 percent in morning trade as the dollar extended its losses against the Japanese currency. Against the yen, the dollar traded at 111.01 at 8:04 a.m. HK/SIN, compared to levels around the 111.4 handle seen at the end of Friday trade in New York.

Major exporters traded lower, with the electric appliances sector falling 1.06 percent and automakers declining. Financials, however, recorded sharp gains, with Mitsubishi UFJ Financial Group up 3.41 percent.

Elsewhere, the Kospi slipped 0.27 percent as steep declines in blue chip tech stocks — including Samsung Electronics declining 1.79 percent — were partially offset by gains in automakers and manufacturing plays.

In Australia, the S&P/ASX 200 shed 0.55 percent amid broad-based losses, with the materials subindex leading the morning’s declines.

Trump headlines on dollar, trade

The dollar nursed its losses after Trump doubled down on his criticism of global monetary policy and the Federal Reserve, tweeting that “China, the European Union and others have been manipulating their currencies and interest rates lower.” That, coupled with U.S. interest rate hikes, was making the U.S. lose its competitive edge as the dollar strengthened, Trump claimed.

Trump said in a separate tweet in reference to the Fed that “[t]ightening now hurts all that we have done.” That came after the president told CNBC in an interview that he was “not thrilled” about the central bank hiking interest rates.

The dollar remained broadly weaker on the back of those comments after Friday’s slide. The dollar index, which tracks the greenback against a basket of currencies, stood at 94.299 after stumbling on Friday.

An important focus for markets remains the U.S.-China trade war: Trump told CNBC in a recent interview that he was prepared to impose tariffs on all Chinese imports to the U.S. if he had to. “I’m ready to go to 500,” the president told CNBC’s Joe Kernen in an interview, referring to the $505.5 billion in goods from China the U.S. imported in 2017.

The U.S. and China have already exchanged new tariffs — each hitting $34 billion worth of goods from the other. The Trump administration has also announced a list of proposed duties on $200 billion in Chinese imports, although those tariffs are not yet in effect.

Despite Trump’s recent remarks, stocks stateside finished the Friday session only marginally lower as strong corporate results releases balanced investors’ fear of the trade war and its implications for global economic growth. About 16.4 percent of S&P 500 companies had released their quarterly results as of Friday, with 83 percent of them topping expectations, according to FactSet.

The Dow Jones Industrial Average slipped 0.03 percent, or 6.38 points, to close at 25,058.12, the S&P 500 shed 0.09 percent to end at 2,801.83 and the Nasdaq Composite inched lower by 0.07 percent to 7,820.20.

What's on tap

The economic calendar for Monday is relatively light on data (all times in HK/SIN):

  • 1:00 p.m.: Singapore June CPI
  • U.S. June home sales are due during U.S. hours

— CNBC’s Fred Imbert contributed to this report.

Source: Read Full Article