TOKYO- Asian stocks skidded to a one-month low after the United States opened a new front in its trade dispute with Europe by imposing tariffs, adding to already-growing market fears about global growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.78 percent. Japan’s Nikkei stock index fell 2.20 percent, on course for its biggest daily decline in six months. Australian shares slumped 2.13 percent to a five-week low.
US stock futures were up 0.25 percent, but this did little to bolster sentiment after shares on Wall Street suffered their sharpest one-day decline in nearly six weeks on Wednesday, when the three major New York share indexes all lost more than 1.5 percent.
Yields on two-year US Treasury yields fell as weakening data on manufacturing and the jobs market suggested the trade war with China has damaged the US economy.
Oil futures extended their decline in Asia as a bigger-than-expected increase in US crude inventories and growing evidence of slowing economic growth point to lower energy demand.
The United States and China have already hiked tariffs on each other’s goods in a year-long trade row that has raised the risk of recession and caused major central banks to ease monetary policy.
On Wednesday, President Donald Trump’s administration announced the United States will impose tariffs on $7.5 billion of goods from the European Union.
Washington will enact 10 percent tariffs on Airbus planes and 25 percent duties on French wine, Scotch and Irish whiskies and cheese from across the continent as punishment for illegal EU aircraft subsidies.
EU manufacturers are already facing US tariffs on steel and aluminum and a threat from Trump to penalize EU cars and car parts.
The tariffs announced Wednesday were approved by the World Trade Organization but could still cause friction across the Atlantic.
The chance that Europe will respond in kind will fuel worries there could be prolonged damage to global growth.
“Tariffs could be a source of tension between the United States and the EU,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management Co in Tokyo. – Reuters