Asian shares amid fears of rising U.S. protectionism

Vastavam web: Asian shares eased on Wednesday amid fears of rising U.S. protectionism as President Donald Trump fired his Secretary of State, regarded as a moderate in his administration, and eyes hefty tariffs on Chinese imports.The combination left investors scurrying for safety as global equities took a knock, the dollar fell and bonds rose.

Australian shares stumbled 0.8 percent in early trade, while Japan’s Nikkei .N225 dropped 0.8 percent. South Korea’s Kospi index .KS11 declined 0.7 percent.
The weakness followed losses on Wall Street, with the Dow .DJI off 0.7 percent, the S&P 500 .SPX down 0.6 percent and the Nasdaq Composite .IXIC down 1.0 percent.

Critics said the move would sow more instability in the volatile Trump administration and marks the departure of another moderate who sought to emphasize the United States’ strong ties to its allies.Separately, Trump is also looking to impose tariffs on up to $60 billion of Chinese imports, targeted at information technology, consumer electronics and telecoms, two people who had discussed the issue with the Trump administration said.Investors suspect policy makers who favour protectionism will also seek to use the currency as a trade weapon, if not overtly then through benign neglect.

Tillerson’s exit and the potential for new import duties on China coincided with subdued U.S. consumer price data with annual core inflation, at 1.8 percent, meeting expectations.“Many traders feel that equities could have ended higher if it weren’t for ‘Rexit’,” analysts at Citi said referring to Tillerson’s departure.

It was the fear of higher inflation and in-turn faster U.S. rate hikes that had hit global shares in early February. But Tuesday’s data did little to change market expectations of Fed rate rises with an increase next week now fully priced-in.“While Tillerson’s exit has been rumoured for months, it speaks to persistent Trump turnover and potentially, more market-alarming, protectionist headlines,” Citi analysts added.

Since Trump took office in 2017 as many as 35 senior officials from his administration have walked out, including Tillerson, according to Citi.