Asian stocks climb despite first trade war shots

HONG KONG (AFP): Asian stocks rebounded yesterday despite the introduction of US tariffs on US$34 billion in Chinese goods in what Beijing called the ‘largest trade war’ in economic history.

Beijing said it had already imposed retaliatory measures on US goods without immediately providing precise details.

But analysts said the news had been expected for weeks and therefore many traders took the opportunity to buy into markets that have been under pressure over growing global trade spats.

Tokyo stocks led the gains, closing 1.1 percent higher, with markets in Shanghai and Hong Kong up by around half a percentage point. Li Daxiao, analyst at Yingda Securities, said news of the tariffs was already priced into the market.

“After the US tariffs announcement, the negative news finally came out and has already been digested over recent weeks.

Therefore investors are not in as much of a panic as before, and the market sentiment will reverse,” said Li.

Stanley Chik, from Bright Smart Securities International in Hong Kong, said that “the impact of tariffs on economic growth appears limited for now, giving the market a breathing spell.”

But these could be just the first skirmishes in a trade war between the world’s top two economies, with financial markets worried about a knock-on effect on the wider global economy and the broader trading system.

Trump has threatened to impose tariffs on some US$450 billion of Chinese goods virtually all of China’s exports to the US -- as he seeks to advance his “America First” protectionist agenda.

Beijing has accused the US of “firing on the whole world” with the measures, pointing out that most of the Chinese goods under attack are made by companies with large foreign investment  including American.

In the US and Europe traders were cheered by comments from the US ambassador in Berlin, who on Thursday told bosses of Germany’s biggest car firms that Washington was calling on the EU to bring tariffs to zero on car imports in exchange for equal treatment by the US.

This drove European car stocks sharply higher and dragged up wider markets. 

Europe opened in the black yesterday, with London’s benchmark FTSE 100 index gaining 0.3 percent.

In the eurozone, Frankfurt won 0.3 percent and Paris added 0.4 percent.

In New York, traders had returned Thursday from the July 4 holiday in a relatively bullish mood, pushing the Dow Jones index up nearly one percent as they cheered solid US employment data. 

Auto giants led the gains -- buoyed by the headlines from Berlin and tech stocks like Google parent company Alphabet and Facebook were also higher.