Asia stocks to drop amid escalating trade tension

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SYDNEY (May 24): Stocks in Asia looked set for further declines Friday, on track for a third week of losses, on the deepening trade tensions between the U.S. and China. Treasuries soared and U.S. shares tumbled.

Futures signaled losses of more than 1% for Japanese shares, with contracts in Hong Kong and Australia also in the red. The rally in bonds intensified, with yields on 10-year Treasuries slumping to the lowest since 2017 and Australian
government bond yields falling to a fresh all-time low. The Bloomberg Dollar Spot Index surged to its highest level this year before retreating. Crude oil steadied after tumbling more than 5%.

Ahead of a long U.S. holiday weekend, concerns are mounting that the trade dispute could cripple global growth and disappointing U.S. factory data Thursday showed the fragility of the expansion there. Commodities slumped across the board as traders increasingly girded for a full-blown trade war.
Meanwhile, the Trump administration is seeking to choke off Beijing’s access to key technologies by limiting the sale of vital U.S. components to China’s Huawei Technologies Co. and is considering putting at least five Chinese surveillance companies on the same blacklist.

“The trade war is going to cause growth to slow, both in the U.S. and China, and therefore globally -- there is no doubt about that,” Komal Sri-Kumar, founder and president of Sri-Kumar Global Strategies Inc., told Bloomberg TV in New York. “The trade war is taking on new dimensions.”

Elsewhere, the pound remained volatile. Theresa May is set to announce a timetable for her resignation as U.K. Conservative Party leader and prime minister on Friday after a backlash over her Brexit plans, people familiar with the matter said.

And these are the main moves in markets:

Stocks

* Futures on Japan’s Nikkei 225 fell 1.1% in Singapore.

* Hang Seng futures earlier slid 0.2%. 

* Futures on Australia’s S&P/ASX 200 Index dropped 0.4%. 

* Futures on the S&P 500 Index were little changed. The underlying gauge declined 1.2% Thursday.

Currencies

* The yen rose 0.1% to 109.49 per dollar. 

* The offshore yuan was steady at 6.9263 per dollar. 

* The Bloomberg Dollar Spot Index was flat.

* The euro bought $1.1182, little changed.

* The British pound was at $1.2663.

Bonds

* The yield on 10-year Treasuries fell six basis points to 2.32%.

* Australian’s 10-year bond yield dropped five basis points to 1.53%. 

Commodities

* West Texas Intermediate crude added 0.3% to $58.08 a barrel.

* Gold gained 0.1% to $1,284.24 an ounce. 

* The Bloomberg Commodity Index sank 1.3%.