Asian stocks are a sea of red on trade war fears

Trump's tariff plan boosts trade war fears.
Asian stocks track Wall Street lower.
European futures signal the weak start.

Omkar Godbole FXStreet Contributor

Asian stocks are reporting losses on Friday as US President Trump's combative action on foreign trade has boosted fears of a full-blown global trade war.

The Shanghai Composite index fell 0.980 percent in early trade and was last seen reporting a 0.33 percent drop. Meanwhile, Japan's Nikkei index suffered a double blow of stronger Yen and broad-based risk aversion and fell 5 percent. Also, stocks in Australia and New Zealand dropped at least 0.25 percent each. Further, the DAX futures and FTSE futures are seen opening on a negative note.

Trump invited steel and aluminum executives to the White House yesterday and said next week he would impose penalties of 25 percent on imported steel and 10 percent on aluminum imports. It is feared that Trump's move would be met by retaliatory action by China, EU and other trading partners.

An all out global trade war will likely boost "bad inflation" (raise prices for consumers) and force central banks to raise rates at a faster rate, thus leading to hard landing. Consequently, the Dow index tanked 500 points yesterday and the Asian stocks are following suit.

The China Iron and Steel Association has labeled Trump's move as a 'stupid protection measure'. Further, the EU and Canada have vowed to take necessary steps as well. So with the trade war" talk in the air, the stocks could remain on the back foot in Europe and US.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.