Stocks in Asia tumbled on Monday as escalating trade tensions between the US and China triggered turmoil on Wall Street. The Hang Seng in Hong Kong dropped 3.5% to 25,374.00, while most other major regional markets logged losses of more than 1%.
The latest row between the two countries began on Thursday when Beijing imposed new restrictions on exports of rare earth materials, which are critical for manufacturing everything from consumer electronics to jet engines. In response, President Donald Trump threatened to hit China with new 100% tariffs, signalling more trouble ahead between the world’s two largest economies.
On Friday, the S&P 500 sank 2.7% in its worst day since April, closing at 6,552.51. The Dow Jones Industrial Average dropped 1.9% to 45,479.60, and the Nasdaq composite lost 3.6% to 22,204.43.
Analysts warn that the trade dispute has raised the possibility of greater concessions from both sides but also the risk of substantial new export restrictions and higher tariffs, at least temporarily. Goldman Sachs chief economist Jan Hatzius said he expects both sides will eventually agree to extend their current tariff pause beyond the upcoming November 10 deadline “but limited concessions from both sides”.
The market turmoil comes as the International Monetary Fund and World Bank hold their semi-annual gathering of finance ministers and central bank governors in Washington today against the backdrop of the new trade threats.
