TOKYO — U.S. futures fell sharply and Asian shares were mostly lower Tuesday after U.S. markets were closed for Martin Luther King Jr. Day, a national holiday.
World shares took a hit after U.S. President Donald Trump threatened to slap a 10% extra tariff on imports from eight European countries, provoking a backlash from important trading partners that invest heavily in the U.S.
The future for the S&P 500 sank 1.3% while that for the Dow Jones Industrial Average dropped 1.2%.
In Asian trading, Tokyo’s benchmark Nikkei 225 lost 1.1% to 52,991.10 after Prime Minister Sanae Takaichi called a snap election for Feb. 8.
The yields on Japan government bonds have been surging after Takaichi indicated she planned to dissolve parliament and hold an election, aiming to capitalize on her strong public opinion ratings. She also has proposed temporarily suspending the food tax.
Expectations that Takaichi will take a renewed electoral mandate to raise government spending have revived worries over Japan’s national finances, pushing the yield sharply higher, while prices of such investments declined. The yield on the 40-year government bond surged to a record 4% on Tuesday, while yields on other long-term bonds also have surging to decades-high levels.
Chinese markets also declined. Hong Kong’s Hang Seng edged down 0.3% to 26,488.88, while the Shanghai Composite ended nearly unchanged at 4,113.65.
In South Korea, the Kospi dropped 0.4% to 4,885.75, while Australia’s S&P/ASX 200 lost 0.7% to 8,815.90.
Taiwan’s Taiex edged 0.4% higher and the Sensex in India declined 0.5%.
This week will bring more corporate earnings in the U.S. and an update on inflation preferred by the Federal Reserve for making policy decisions.
The U.S. Federal Reserve’s next policy meeting is in two weeks. It’s expected to keep its benchmark interest rate unchanged, as it strives to balance a slowing jobs market with inflation, which remains above the Fed’s 2% goal. The Bank of Japan has a monetary policy board meeting ending later this week.
Germany’s DAX lost 1.3% to close at 24,960.33 and the CAC 40 in Paris fell 1.9% to 8,101.96. Britain’s FTSE 100 declined 0.4% to 10,190.26.
Among U.S stock futures, the S&P 500 was down 1% early Tuesday, while the contract for the Dow Jones Industrial Average was down 0.9%.
Trump said Saturday that he would charge a 10% import tax starting in February on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland because of their opposition to American control of Greenland. The European countries targeted by Trump blasted his threat to raise tariffs, saying they “undermine transatlantic relations and risk a dangerous downward spiral.”
In other dealings early Tuesday, U.S. benchmark crude oil lost 14 cents to $59.20 per barrel. Brent crude, the international standard, shed 11 cents to $63.83 a barrel.
The U.S. dollar rose to 158.38 Japanese yen from 158.14 yen. The euro rose to $1.1691 from $1.1645. – AP
