Stocks drop and US dollar rallies amid trade war concerns

Stocks drop and US dollar rallies amid trade war concerns

LONDON
Stocks drop and US dollar rallies amid trade war concerns

Stock markets in Asia and Europe sank and the dollar surged on Monday after Donald Trump signed off huge tariffs on China, Canada and Mexico, and warned the European Union would be hit "pretty soon."

In Asia, the Year of the Snake started with a nasty bite.

Tokyo, Seoul and Jakarta each shed more than two percent while Sydney, Bangkok and Wellington were each off more than one percent.

Singapore and India also fell, while Hong Kong gave up early deep losses to end only marginally down. Shanghai remained closed for a holiday.

London opened more than one percent lower, while Paris and Frankfurt each lost more than two percent.

"This wasn't a shock. It's been telegraphed for weeks but investors will still feel the jolt as markets adjust to a move almost universally seen as damaging to global growth and financial stability," said Stephen Innes at SPI Asset Management.

On currency markets the dollar soared 2.3 percent against the Mexican peso and more than one percent against the Canadian dollar and euro.

It was also sharply higher against the South Korean won, Australian dollar and South African rand.

"We suspect the path of least resistance for now is for Asian currencies and risk assets to weaken, together with a greater risk premia to account for future meaningful tariff moves beyond what we have seen," said Michael Wan at MUFG.

Gold slipped, having hit a fresh record above $2,800 last week, as the stronger dollar made it more expensive to buy the metal for holders of other currencies.

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