Asian Shares Retreat On US-China Tensions

(RTTNews) - Asian stocks closed mostly lower in thin trade on Monday, with mainland China, New Zealand and Malaysian markets closed for holidays.

Trade tensions returned to the fore as Beijing accused U.S. of violating Geneva trade truce over chip curbs and the Trump administration announced it will double the current tariff rate on steel and aluminum imports from 25 percent to 50 percent.

Escalating Russia-Ukraine tensions and disappointing manufacturing data from China, Japan and South Korea for May also kept investors on edge.

Oil prices jumped over 2 percent in Asian trade as Ukraine launched a major drone strike, destroying 40 key Russian aircraft, further reducing the prospects for an end to the fighting.

Gold also jumped more than 2 percent to trade above $3,350 per ounce as the dollar weakened against its major rivals, weighed down by weakening U.S. macroeconomic fundamentals.

Hong Kong's Hang Seng index dropped 0.57 percent to 23,157.97 in view of rising Sino-U.S. tensions and weak PMI data from China.

Tech and EV stocks tumbled as the U.S.-China trade truce risked falling apart over China's slow-walking on rare-earth exports and the U.S. curbs restricting the sale of chip design software, chemicals, other products to China.

Investors also digested data that showed Chinese factory activity data contracted at a slower pace in May than the month prior.

Japanese markets tumbled as a stronger yen due to rising uncertainties about trade issues weighed on export-related shares such as automakers.

The Nikkei average fell 1.30 percent to 37,470.67 while the broader Topix index settled 0.87 percent lower at 2777.29.

Mitsubishi Motors, Honda Motor and Toyota lost 2-3 percent. Chip-related stocks also declined, with Advantest tumbling 3.8 percent and Tokyo Electron falling 1.7 percent. Seoul stocks recovered from an early slide to end on a flat note. The Kospi average finished marginally higher at 2,698.97 ahead of Tuesday's snap election.

Australian markets ended modestly lower, dragged down by banks and energy stocks on renewed Sino-U.S. trade tensions.

The benchmark S&P/ASX 200 dipped 0.24 percent to 8,414.10 while the broader All Ordinaries index closed 0.26 percent lower at 8,637.50.

Shares of Brickworks soared 27.6 percent after an announcement that the building products maker and investment company Washington H Soul Pattinson's will merge to create a new A$14 billion entity.

U.S. stocks fluctuated before ending mixed on Friday as Treasury Secretary Scott Bessent said trade discussions with China had been "a bit stalled" and President Trump accused China of totally violating a tariff agreement reach last month.

The Dow edged up by 0.1 percent as data showed U.S. consumer spending increased marginally in April and the Federal Reserve's primary inflation rate, the core PCE price index, fell in April to its lowest level since March 2021.

The S&P 500 finished marginally lower and the tech-heavy Nasdaq Composite shed 0.3 percent.