HONG KONG (Nikkei Markets) -- Asian shares outside of Japan plunged Friday after U.S. President Donald Trump's fresh tariffs on Chinese goods prompted a flight out of risk assets.
The Nikkei Asia300 Index declined 1.9% to close at 1,263.97. Energy related companies were among the biggest losers on the gauge after Brent crude fell by the most in over three years yesterday amid renewed worries over trade. PetroChina and CNOOC declined 3.6% each, Keppel fell 3.2%, and PTT Exploration and Production slipped 2.6%.
Asian and European equities witnessed a selloff after Trump said the U.S. will levy a 10% tariff on $300 billion worth of Chinese shipments with effect from Sept. 1 in addition to the 25% tariffs on $250 billion of goods already in place.
China's failure to buy U.S. agricultural products, as agreed upon earlier, was among the reasons Trump listed for the latest round of tariffs. At a G20 gathering in June, Trump and Chinese President Xi Jinping had agreed that Washington would hold off from raising tariffs on Chinese goods and Beijing would buy more American agricultural goods.
Trump's announcement was unexpected, considering that it came on the back of talks between the U.S. and Chinese officials earlier this week, which the White House press secretary said were "constructive."
"This move has obviously soured relations further. It has made a deal less likely and raised the risk of further trade tensions once again," Louis Kuijs, head of Asia Economics at Oxford Economics, said. "We expect this step to make China less keen to achieve a deal and more determined to prepare itself for long-term economic tension with the U.S."
U.S. equities closed at a one-month low yesterday and safe-haven demand prompted the 10-year Treasury yield to fall to an almost three year low. The mounting trade worries increased the likelihood of the Federal Reserve cutting rates at the next meeting in September.
The Chinese yuan paced losses in Asian currencies, falling to an eight-month low. In the wake of the losses on the yuan, mainland airlines tumbled. Air China dropped 4% and China Southern Airlines declined 2%.
An index of Chinese companies listed in Hong Kong, the Hang Seng China Enterprises Index, fell 2.6%, the biggest decline in three months. China Life Insurance and Ping An Insurance Group shed at least 2.5% each. Heavyweight Tencent Holdings fell 3.8%.
Meanwhile, South Korean shares were also weighed down after the Japanese government approved a decision to remove the nation from a so-called "white list" of countries that enjoy a preferential trade status with Japan. LG Display slumped 5.6% and SK Hynix, which makes semiconductor memories, lost 2.1%, while heavyweight Samsung Electronics gave up 0.6%.
SK Telecom climbed 3.3% despite the South Korean wireless telecommunications operator reporting a 7% fall in April-June net profit.
Malaysian mobile telecom operator Maxis slipped 4.9% after reporting a 17% on-year fall in the June quarter amid termination of a network sharing agreement and shrinking revenue from prepaid and postpaid users.
Bharti Airtel advanced 6%. While the Indian mobile operator reported a loss in the June quarter, its India business saw robust additions and surprising quarter-on-quarter increase in average revenue per user.
Singapore Post added 0.5% after saying that net profit for the quarter ended in June rose 37.2% year-on-year.
Hong Kong-based conglomerate CK Hutchison Holdings slipped 0.8% after reporting a 3% decline in in January-to-June revenue.
Tata Power dropped 1.2% after the Indian electric utility's June quarter net profit missed estimates.