TOKYO (Reuters) – Wall Street futures weakened early in trading on Monday, setting the tone for Asian markets to hold back after US-China tariffs entered into force, heightening the gloomy investor expectations for global growth prospects.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, USA, August 14, 2019. RATES / Eduardo Munoz
E-mini futures for US S & P500 ESc1 fell 1.06% in early trading and last fell 0.68% at 2,905, while NIYcm1 traded in Chicago Nikkei futures suggest Japan's Nikkei .N225 is down 0.7%.
The widest MSCI index of Asia-Pacific shares outside Japan. MIAPJ0000PUS, which lost 4.7% last month, is likely to remain under pressure.
The United States rejected 15% tariffs on various Chinese goods on Sunday – including shoes, smart watches and flat panel TVs – while China imposed new duties on raw materials in the United States, the latest escalation in a tumultuous trade war.
Various studies indicate that tariffs will cost US households up to $ 1,000 a year, and the last round will affect a significant number of US consumer goods.
In response, China began imposing additional tariffs on some US $ 75 billion worth of goods. Beijing did not specify the value of goods facing higher tariffs than Sunday.
Many market participants argue that market reaction was probably exaggerated by algorithmic-driven player flows in thin trading conditions early in Asian trading on Monday.
Liquidity may be even more limited than usual due to the US market vacation on Monday.
"(Market in the market) will show you how many equity extraction algorithms are related to equity compared to forex related. Was anyone surprised by these tariffs that came into force yesterday? "Said Takeo Kamay, implementation manager at CLSA in Tokyo.
Despite the volatility, lower moves reflect major investor concerns about increasing the cost of the Sino-American trade war for the global economy.
An official study released on Saturday showed that factory activity in China contracted in August for the fourth consecutive month, as further evidence of a blow to the world's second-largest trade war economy.
Tensions are also mounting in Hong Kong, with police and protesters clashing with some of the most intense violence since unrest broke out more than three months ago over fears that Beijing is undermining democratic freedoms on the territory.
Thousands of protesters blocked roads and public transport links to Hong Kong airport, and police made several arrests after protesters smashed CCTV cameras and metal poles and dismantled station turnstiles.
China, eager to suppress unrest before the 70th anniversary of the founding of the People's Republic of China on October 1, accused foreign powers, particularly the United States and Britain, of fomenting unrest.
Oil prices also fell early in trading on Monday.
Crude Brent LCOc1 futures fell 0.68% to $ 58.85 a barrel, while US West West Intermediate (WTI) crude CLC1 lost 0.54% to $ 54.80 a barrel.
The foreign exchange market has been quieter so far, with the dollar slightly declining against the yen at 106.12 yen JPY =, a decrease of 0.13% over end-US levels.
The euro remained nearly equivalent to $ 1.09905 EUR =, not far from the two-year low of $ 1.0963 hit by US trade on Friday.