Investing.com – Most Asian shares fell on Monday, with Chinese markets leading the losses on the prospect of a trade war with the European Union, while anticipation of key U.S. inflation data also supported sentiment.
Regional markets took so-so cues from Wall Street as a combination of profit-taking and interest rate concerns sent U.S. stocks down from record highs on Friday. US stock index futures were muted in Asian trading.
Stronger-than-expected US Purchasing Managers’ Index data fueled fears that the strength of the US economy will keep interest rates high for longer.
China stocks fall on fears of trade war with EU
China indexes and indices fell 0.4% and 0.8% respectively, while losses in mainland Chinese stocks pulled Hong Kong’s index down 1%.
Chinese markets are suffering big losses after the European Union imposed high tariffs on imports of Chinese electric vehicles earlier in June. The move angered Beijing and raised the prospect of a trade war.
Chinese officials warned of a potential trade war with the EU as Chinese and German ministers met to agree on the way forward. Beijing has also been seen considering imposing retaliatory tariffs on imports of European cars.
Chinese stocks have suffered sharp losses over the past two weeks, while sentiment towards the country and Asia as a whole remained negative. Losses in Hong Kong were also driven by declines in shares of heavyweight technology companies.
Weak national data also weighed on sentiment last week.
Other markets exposed to China have retreated. Australian shares fell 0.6% and South Korea fell 0.9%.
Japanese stocks are rising, intervention with the yen is expected
Japanese stocks showed slight deviations on Monday, with indexes and indices each rising 0.3%.
Local shares were somewhat buoyed by weakness in the pound, which was near its lowest level against the dollar in more than 30 years.
But the yen’s weakness has left investors largely wary of any potential intervention by Tokyo in the currency market, especially after key Japanese finance ministers warned of such a scenario.
Broader Asian markets moved flat to trough, paying particular attention to key US inflation data this week for more interest rate signals. The data, which is the Federal Reserve’s preferred measure of inflation, will be released this Friday.
India index pointed to a weak opening after the index faced heavy profit taking after hitting record highs in early June.