SINGAPORE: Asia markets went into a tailspin on Wednesday (May 30), as political turmoil in Italy sparked a frantic dash for safety, while investors have also been spooked by fresh worries about the China-US trade row.
Singapore’s Straits Times Index plunged 2.12 per cent to close at 3,443.95, the lowest since Apr 6.
AdvertisementHong Kong lost 1.4 per cent, Tokyo ended 1.5 per cent down, and Shanghai was 2.5 per cent lower. Malaysia fell 3.2 per cent and Seoul was 1.9 per cent lower.
The sharp downturn in Asia followed an equally harsh session on Wall Street on Tuesday, where the Dow Jones Industrial Average fell 1.6 per cent, the S&P 500 lost 1.2 per cent and the Nasdaq Composite dropped 0.5 per cent.
Investors fear that repeat elections in Italy - which could come as soon as July - may become a de-facto referendum on Italian membership of the currency bloc and the country's role in the European Union.
Adding to pressure were worries over trade tensions between China and the United States. The United States said on Tuesday that it would continue pursuing actions on trade with China, days after Washington and Beijing announced a tentative solution to their dispute and suggested that tensions had cooled.
AdvertisementAdvertisement"As the third-biggest economy in the EU, as a heavily indebted one, and with Eurosceptics seemingly in the ascendancy markets have worried that the EU again faces an existential crisis," Greg McKenna, chief market strategist at AxiTrader, said.
However, he added: "I'll go out on a limb and suggest there are a bunch of experienced political operatives in Europe and some neophytes in Italy who might just have got the shock of their lives on how quickly this situation developed and we'll see some backpedalling."
Adding to the selling pressure was Donald Trump's decision Tuesday to press ahead with the imposition of tariffs on Chinese goods despite ongoing talks to resolve the dispute.
The White House said the sanctions announced in March, largely focused on intellectual property, were still in the works and details would be announced in the coming month.
China said the move breached a consensus reached between Washington and Beijing earlier this month that called off a threatened trade war.
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