Asian saw a more limited slide in stocks on Tuesday than the tumble on Wall Street overnight, while the yuan recovered as investors monitored the latest headlines on US-China trade tensions.
While the S&P 500 Index slumped 2.4% Monday in the wake of China’s retaliation on American goods, Japan’s Topix dropped less than 2% and South Korea’s Kospi less than 0.5%, while Chinese shares had modest losses. Hong Kong equities fell about 2% as the market re-opened after a holiday.
The offshore yuan pared yesterday’s losses, as did S&P 500 futures after President Donald Trump said he has a feeling that talks with China will be “very successful.” Ten-year Treasury yields hovered near the lowest level since late March and the yen slipped.
On Monday, all three major U.S. benchmarks ended more than 2% lower, only the second time this year that’s happened, after China targeted some of the biggest US exporters in response to American tariffs. The new penalties also took aim at American farmers, driving down soybean and cotton prices. Investors got a brief respite after Trump indicated he’ll speak with China’s Xi Jinping at the end of June during the G-20 summit and said he hasn’t yet decided about fresh tariffs on the remaining $300 billion in Chinese imports. He later said that in three or four weeks it will be clear if the talks are successful.
Elsewhere, oil stabilized around $61 a barrel after climbing earlier on concerns about rising tensions in the Persian Gulf. European shares dropped more than 1% after the European Union said it was finalizing a list of US goods to target in the event Trump imposes levies on car imports.