Asia stocks spooked by Trump tariff warning; RBA rate cut in focus

Investing.com-- Most Asian stocks fell on Monday after U.S. President Donald Trump said countries in the BRICS bloc will face higher trade tariffs, while offering few direct signals on the full scope of his planned levies. 

Focus was also on an upcoming Reserve Bank of Australia meeting, where the central bank is widely expected to cut interest rates further. But these bets provided little support to Australian stocks. 

Regional markets were spooked by Trump stating that countries in the BRICS bloc will face 10% higher duties. Asian markets also fell in tandem with Wall Street futures, which turned negative after the S&P 500 and the NASDAQ Composite hit record highs on Thursday.

S&P 500 Futures fell 0.4% in Asian trade. 

Asia stocks skittish amid tariff caution

Trump over the weekend said he will begin issuing letters to major economies informing them of their trade tariffs from Monday, although he did postpone the imposition of the duties to August 1 from July 9. 

Trump said on Sunday evening that countries under the BRICS bloc– whose Asian members include India and China– will face an additional 10% tariff over their allegedly anti-American policies. 

But it remains unclear just how high Trump’s tariffs will be. The president had in April unveiled tariffs ranging from 10% to 50% on major economies, but gave no indication in recent weeks whether the tariffs will be imposed as flagged earlier. 

Washington also appeared to have reached few trade deals in the three months since April, with Japan, South Korea, and India seen still engaging in high-level talks. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes shed 0.4% and 0.1%, respectively, while Hong Kong’s Hang Seng index lost 0.5%. All three indexes deepened losses slightly after Trump’s BRICS warning. 

Chinese markets were little supported by recent signs of progress in Sino-U.S. trade relations, after the two countries lifted some export controls against each other last week. 

Beijing also outlined more planned stimulus measures in the past week. 

Gift Nifty 50 Futures for India’s Nifty 50 index reversed early gains to trade mildly negative after Trump’s warning. 

Japan’s Nikkei 225 and TOPIX indexes shed about 0.5% each, after mixed prints on consumer spending spurred more doubts over the Bank of Japan’s plans to raise interest rates.

South Korea’s KOSPI was flat. Asian technology shares also took little support from Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) supplier Hon Hai Precision Industry Co Ltd (TW:2317) clocking record-high second-quarter revenue over the weekend. 

Australia stocks dip with RBA rate cut in focus 

Australia’s ASX 200 fell 0.1%, remaining in sight of recent record highs as markets awaited the RBA’s decision.

The central bank is widely expected to cut interest rates by 25 basis points to 3.60% on Tuesday, although analysts at Westpac warned that chances of a cut were still not 100%.

A July cut will mark the RBA’s third 25 bps cut this year, after it kicked off an easing cycle in February. Since then, signs of persistent cooling in Australian inflation, along with easing economic growth, have posited a largely dovish outlook for the RBA.

Increased trade headwinds for Australia are also expected to invite more easing.