(Bloomberg) -- The dollar strengthened and Asian shares dropped after President-elect Donald Trump said the US will impose additional 10% tariffs on Chinese goods and place 25% levies on imports from Mexico and Canada.
US equity futures also slipped as the comments fueled concern Trump will follow through on the tariffs plans he advocated in his campaign. In posts to his Truth Social network, he claimed China had failed to deliver on promises to crack down on drugs, and the levies on Mexico and Canada were needed to restrict migrants and illegal drugs flowing into the US.
Bloomberg’s Dollar Spot Index surged 0.6%, while China’s offshore yuan fell 0.4% and Mexican peso and Canadian dollar both tumbled more than 1%. Treasuries also slipped, sending yields higher. Share benchmarks in Japan, Australia and South Korea all dropped.
“Risk sentiment is getting crushed for now on Trump’s tariff risks — the dollar is being viewed as a haven and the affected nations’ currencies like the Mexican peso are getting hammered,” said Mingze Wu, currency trader at StoneX Financial. “This may just be a taste of what’s to come.”
Trump’s comments came after US stocks and Treasuries had climbed Monday as traders welcomed the former president’s pick of Scott Bessent for Treasury Secretary, betting the hedge-fund manager will bring a Wall Street mindset to the role. While Bessent has at times suggested that Trump is signaling a maximalist approach as a negotiation tactic, in an op-ed Nov. 15 for Fox News he signaled strong support for tariffs.
Commodity currencies such as the Australian dollar also tumbled. The Aussie slid as much as 0.9%, while New Zealand’s dollar dropped 0.5%.
“Trump’s threat of even more tariffs will give another leg up to the US dollar,” said Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney. “Aussie and kiwi will be dragged down because of their links to the Chinese economy.”
Gold fell as the dollar jumped after Trump threatened import tariffs of 25% on Canada and Mexico.
Oil steadied after a sharp decline in the previous session as Israel said that it had edged closer to a cease-fire agreement with Hezbollah.
Key events this week:
- Fed minutes, US new home sales, consumer confidence, Tuesday
- US PCE, initial jobless claims, GDP, Wednesday
- Eurozone consumer confidence, Thursday
- US Thanksgiving holiday. Markets closed, Thursday
- Eurozone CPI, Friday
- ECB releases consumer expectations survey for October, Friday
- “Black Friday,” the traditional start of the US holiday shopping rush
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.5% as of 10:03 a.m. Tokyo time
- Hang Seng futures rose 0.6%
- Nikkei 225 futures (OSE) fell 1.5%
- Japan’s Topix fell 1.5%
- Australia’s S&P/ASX 200 fell 0.5%
- Euro Stoxx 50 futures fell 1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.6%
- The euro fell 0.6% to $1.0434
- The Japanese yen rose 0.2% to 153.95 per dollar
- The offshore yuan fell 0.3% to 7.2696 per dollar
Cryptocurrencies
- Bitcoin rose 0.2% to $93,925.28
- Ether fell 0.3% to $3,428.16
Bonds
- The yield on 10-year Treasuries was little changed at 4.28%
- Japan’s 10-year yield declined 1.5 basis points to 1.055%
- Australia’s 10-year yield declined six basis points to 4.43%
Commodities
- West Texas Intermediate crude fell 0.5% to $68.62 a barrel
- Spot gold fell 0.2% to $2,620.46 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Rob Verdonck, Ruth Carson and Vinícius Andrade.
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