Global shares were mostly lower on Friday as trade worries continued after US President Donald Trump announced additional tariffs on imports from Mexico.
Global shares were mostly lower Friday as trade worries continued after US President Donald Trump announced additional tariffs on imports from Mexico.
Asian stocks edged down, rattling investors.
Trump's Twitter announcement of a five percent tariff on all goods from Mexico starting June 10 sent shares in automakers with plants in the North American country falling sharply.
Trump said the duties would gradually increase until "illegal migrants" stop coming into the United States through Mexico.
Mexico's under-secretary for North American affairs called the move "disastrous" and vowed to retaliate.
The announcement saw shares in Japanese automakers plunge, with Honda dropping 4.26 percent to 2,651 yen, Mazda plummeting 7.13 percent to 1,061.5 yen, Nissan down 5.31 percent to 734.6 yen, and Toyota slipping 2.84 percent to 6,384 yen.
Tokyo's main index fell 1.6 percent, while Hong Kong shed 0.8 percent. Shanghai edged down 0.2 percent and Singapore lost 0.8 percent. Sydney and Seoul managed a 0.1 percent gain.
European stocks also tumbled at the open, with London slipping 0.7 percent. Frankfurt shed 1.3 percent and Paris retreated 1.0 percent.
Global trade tensions forced investors to pile into safe-haven assets, sending yield on German 10-year government bonds to a record low.
Around 1010 GMT the rate of return for investors on 10-year German government bonds, or Bunds, hit -0.211 percent in the secondary market, breaking the previous record of 0.205 percent set in July 2016.
Rattling North American trade
Trump's announcement has put the new North American trade pact between the US, Canada and Mexico at risk – with the agreement still awaiting ratification by the legislatures of the three countries.
In a letter to Trump after the announcement, Mexican President Andres Manuel Lopez Obrador struck a conciliatory tone.
"I express to you that I don't want confrontation," he wrote. "I propose deepening our dialogue, to look for other alternatives to the migration problem."
'Markets are nervous'
Coming amidst a protracted trade war between the United States and China, the announcement will do little to soothe investors' anxieties.
China on Friday accused the United States of repeatedly lying about the effects of the trade war on its economy as Beijing prepares to hike tariffs on American goods ranging from wine to pianos and condoms.
Saturday's retaliatory tariff increase will cap a week that was marked by a heated war of words and Chinese threats to curb exports of rare earths, which are key to US tech industries, after Trump blacklisted telecom giant Huawei.
The latest target of Beijing's ire was commentes by Trump stating that the US tariffs have had a "devastating effect" on the Chinese economy.
"The US side has said such lies not just once or twice. Every time China exposes them in time, but the US seems to be very persistent, even obsessed and keeps repeating these lies," foreign ministry spokesman Geng Shuang said at a regular press briefing.
Washington and Beijing resumed their tariffs battle earlier this month after trade talks in Washington ended without a deal, with the US side accusing Chinese negotiators of reneging on previous commitments.
The countries have exchanged tariffs on $360 billion in two-way trade so far.
"A US-China trade deal will be even less likely," said Khoon Goh, head of research at Australia & New Zealand Banking Group Ltd. in Singapore.
"At the end of the day, what's the point of doing a deal if the US can just impose tariffs arbitrarily?"
"Markets are getting nervous that we may not see anything constructive on the trade front until the June 28-29th G20 summit, where President Trump and his Chinese counterpart will meet on the sidelines", said OANDA senior market analyst Edward Moya.
"The longer the trade war lasts, the greater the global growth deterioration," he said.
Oil prices fell after a smaller-than-expected drop in US crude supplies, with new data showing US oil production at an all-time high.
"US production appears to be ramping up too quickly to allow inventories to come down much," Moya said.
"Gasoline inventories also posted a strong rise for a second consecutive week, despite the beginning of the summer driving season."
Key figures around 0820 GMT
Tokyo - Nikkei 225: DOWN 1.6 percent at 20,601.19 (close)
Hong Kong - Hang Seng: DOWN 0.8 percent at 26,901.09 (close)
Shanghai - Composite: DOWN 0.2 percent at 2,898.70 (close)
London - FTSE 100: DOWN 0.7 percent at 7,167.24 (open)
Pound/dollar: UP at $1.2627 from $1.2613 at 2100 GMT
Euro/dollar: UP at $1.1151 from $1.1130
Dollar/yen: DOWN at 108.86 yen from 109.61 yen
Oil - Brent Crude: DOWN 90 cents at $65.97 per barrel
Oil - West Texas Intermediate: DOWN 51 cents at $56.08 per barrel
New York - Dow: UP 0.2 percent at 25,169.88 (close)