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The Shanghai composite tumbled more than 1% and the Shenzhen component fell 0.94%, while the Shenzhen composite slipped 0.802%. They had soared last Friday despite the U.S. raising tariffs from 10% to 25% on $200 billion worth of Chinese goods.
The Nikkei 225 in Japan declined 0.56% in morning trade, with shares of index heavyweight Softbank Group falling more than 1%. The Topix index also slipped 0.15%.
In South Korea, the Kospi fell 0.74%, while Australia’s ASX 200 also shed 0.35%.
“Lack of activity data and public holidays in some countries will make it a slow start of the week for Asian markets. But the risk-off continues with the escalation of US-China trade war after last Friday’s move by the US to raise tariffs on Chinese goods. All eyes are on China’s retaliation.,” Prakash Sakpal, Asia economist at Dutch bank ING wrote in a note.
Markets in Hong Kong are closed on Monday for a holiday. Meanwhile, futures pointed to significant declines on Wall Street when they open later on Monday stateside. As of 8:01 p.m. ET Sunday, futures implied an opening drop of more than 200 points for the Dow Jones Industrial Average.
In an interview with Fox News on Sunday, White House Economic Advisor Larry Kudlow said U.S. President Donald Trump and Chinese President Xi Jinping are likely to meet at the upcoming June G-20 summit in Japan.
Kudlow said the chances of such a meeting “were pretty good,” but he said there are “no concrete, definite plans” for when U.S. and Chinese negotiators will meet again.
Trade talks between U.S. and Chinese negotiators broke up on Friday without a trade agreement. The talks took place under the shadow of Trump’s threat to more than double the tariff rate to 25% on $200 billion of Chinese goods.
“It remains to be seen how the markets will react this week once they are back in full swing, but the news on the trade-tariff front is anything other than reassuring,” David de Garis, a director and senior economist at National Australia Bank, wrote in a morning note.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.296 after scaling highs above 97.6 last week.
The Japanese yen, widely viewed as a safe-haven currency, traded at 109.71 against the dollar after strengthening from levels above 110.4 in the previous week. The Australian dollar dropped to $0.6983, following highs above $0.702 seen last week.
Oil prices were mixed in the morning of Asian trading hours, with the international benchmark Brent crude futures contract recovering from an earlier slip to gain 0.13% to $70.71 per barrel, while U.S. crude futuresdeclined 0.13% to $61.58 per barrel.