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Abu Dhabi, UAEThursday 15 November 2018

Asian markets sink on China-US tariff fears

Beijing has warned it will retaliate immediately against any American measures, fuelling fears of an all-out trade war
Japan's Nikkei led losses on Friday, ending 0.8 per cent lower. AP

Most Asian equities dipped on Friday as investors fret that the US will ramp up its trade war with China by imposing fresh tariffs. Chip-makers were among the biggest losers following a sharp sell-off in New York.

Japan's Nikkei led losses, ending 0.8 per cent lower with exporters hurt by a stronger yen as dealers ran to the safe-haven unit for shelter from market turmoil. Sydney lost 0.3 per cent and Singapore dropped 0.4 per cent. Seoul gave up 0.3 per cent and Manila was 1.1 percent off, while Taipei shed 0.7 percent.

While emerging market contagion fears continue to stalk trading floors, US President Donald Trump's protectionist drive returned to the fore following an indication that Japan was next in the firing line, while Nafta talks with Canada amble along.

There was some relief that Mr Trump did not immediately impose levies on $200 billion of Chinese goods after the passing of a deadline for a public consultation.

However, Beijing has warned it will immediately retaliate against any measures, fuelling fears of an all-out trade war that is already showing signs of causing a drag on the global economy.

Mr Trump also appeared to be preparing to set his sights on Japan, with an opinion piece in The Wall Street Journal saying his good relationship with Tokyo "will end as soon as I tell them how much they have to pay".

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While Mr Trump has mostly taken out his anger with China and Europe, he has often complained of an uneven trade relationship with Japan.

"The timing of the WSJ story is significant as it serves as a reminder before an expected Japan-US summit later this month, when trade consultations will also likely be held," said Daisuke Karakama, chief market economist at Mizuho Bank.

Chip firms joined their Wall Street counterparts in turning south on growing concerns about demand following a lowering of expectations by the US giant KLA-Tencor.

Samsung sank almost three per cent in Seoul while Tokyo Electron dived six per cent and Advantest was more than seven per cent lower.

The “earnings trend in [the] semiconductor sector is bound to weaken further as end-demand remains lacklustre while orders have been at very elevated levels,” Amir Anvarzadeh, senior strategist with Asymmetric Advisors in Singapore, told Bloomberg News.