Fear of Recession Strikes Asia Markets after a New Trade War between the U.S.-EU Arise!

Stocks in Asia set to a rough start amid a new trade war between the U.S. and EU after World Trade Organization (WTO) has approved the U.S to impose tariffs on $7.5 billion of European goods over Airbus dispute.

 

As of 8:35 local time in Thailand, Nikkei lost 1.98%, HSI dipped 0.65%, ASX 200 plunged 2.13%, while SSEC and Kospi are closed on national holidays.

Yesterday, SET closed at 1,613.64 points, plunged 10.45 points or 0.64% with a trading value of 42.2 million baht.

 

The spark of this new trade war occurred after arbitrators from the WTO granted the U.S. President Donald Trump’s administration the right to impose tariffs on European imports, claiming that EU (Germany, France, Spain, and the UK) handed over illegal subsidies to Airbus.

The U.S. stated that it would levy 10% tariffs on European-made Airbus planes and 25% duties on French wine, Scotch and Irish whiskeys and cheese from across the continent.

 

Dow Jones fell 494.42 points or 1.86% to close at 26,078.68, dipped below its 50-day and 100-day moving averages, two technical levels watched by traders. S&P 500 plunged 1.79% to fall below its 100-day moving average while Nasdaq slipped 1.6%.

Cecilia Malmstrom, the EU trade commissioner, vowed to retaliate if the U.S. imposes tariffs on EU. “If the U.S. decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than to do the same,” said Cecilia in the statement.

 

Fear of recession struck investors just a day after the U.S. announced that the manufacturing activity in the U.S. contracted to its worst level since June 2009 while the political issues still remained. Together with the release of weak manufacturing data from Europe and the protest in the financial hub, Hong Kong, that started to escalate to a higher level.