Asian shares sank on Monday as trade war deepens

Asian shares fall on Monday as the latest salvos in the Sino-U.S. trade war shook confidence in the world economy and sent investors steaming to the safe harbor of sovereign bonds and gold, while slugging emerging market currencies.

Asian Shares

On Friday, U.S. President Donald Trump announced an additional duty on some $550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods.

“Downside risks are increasing for both the global economy and markets,” said Mark Haefele, global chief investment officer at UBS. “As a result, we are reducing risk in our portfolios by moving to an underweight in equities to lower our exposure to political uncertainty.”

“We continue to favor carry strategies in credit and foreign exchange markets, which benefit from central bank easing in a low-growth environment.”

• MSCI’s broadest index of Asia-Pacific shares outside Japan shed 2.0%, and Australia 1.5%.
• Japan’s Nikkei lost 2.1%, while Shanghai blue chips fell 1.2%.
• E-Mini futures for the S&P 500 falling 0.7%, and EUROSTOXX 50 futures down 1.1%.

Currency

• The euro was firm at $1.1145, having climbed 0.6% on Friday.
• After an early hit on the yen to 104.47, it recovered most of the lost ground to stand at 105.33. 

Bonds

• Yields on 10-year Treasury notes were down at 1.46%,

Commodities

• Spot gold got a boost from the slide in yields, rising 0.9% to $1,539.33 per ounce and touching its highest since April 2013.
• Oil prices went the other way on worries the tariff dispute would crimp world demand.
• Brent crude futures slid 68 cents, or 1.1%, to $58.66, while U.S. crude lost 79 cents to $53.38 a barrel.

Source: Reuters