Asian stocks drop on trade concerns, potential double top on Nikkei
- Asian stocks are flashing red following the overnight decline in the US equities.
- President Trump is planning to 'restore' tariffs on steel from Brazil and Argentina.
- Nikkei is likely creating a double top bearish reversal pattern on the daily chart.
Asian stocks are reporting losses, tracking the overnight losses on Wall Street triggered by fresh tariffs announced by President Donald Trump.
At press time, Japan's Nikkei is trading at 2,330, representing a 200 point or a 0.9 % drop. The index seems to be charting a double top pattern with the neckline support of 22,727 on the daily chart.
Meanwhile, the Shanghai Composite is shedding 0.28% and shares in Australia are down close to 2%. Stocks in New Zealand, Hong Kong and South Korea are also flashing red.
The US stocks fell in the overnight trade with the Dow Jones Industrial Average slipping almost 1% on renewed trade tensions. President Trump on Monday said he will place tariffs on steel and aluminium imports from Brazil and Argentina.
Further, the disappointing US ISM manufacturing PMI likely added to the bearish tone around the equities. Treasury yields, however, remained resilient despite the risk-off tone in the markets. The 10-year yield traded flat lined around 1.82%, having gapped higher from Wednesday's close at 1.75%.
Currently, the futures on the S&P 500 are reporting a 0.11% gain. A US proposal for tariffs on $2.4 billion of French goods announced after the Wall Street close may continue to cap upside in equities on Tuesday.
Stocks in Australia could reverse course, if the Reserve Bank of Australia sounds dovish, reinforcing the best for additional rate cuts in 2020. The central bank is widely expected to keep rates unchanged at 0.75% on Tuesday. Many experts believe the RBA will hit the zero lower bound in 2020 and will be forced to implement unconventional policies like quantitative easing.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
