Asian stocks drop, yuan slides as trade war escalates

Stocks rebound after Trump predicts China talks will be 'very successful'

Asian stocks were poised to track a rebound in U.S. equities as President Donald Trump said he had an ongoing dialogue with China, assuaging some concern about the deteriorating trade war. "The USD/JPY is trading higher, which means investors are selling the so-called 'safe-haven" Japanese Yen and USA stock index futures contracts are trading higher, signaling the return of buyers. The way that works is not by dumping treasuries, but buying dollars and dumping their own currency in bulk (usually with a horde of foreign exchange reserves), and using the dollars to purchase treasuries.

For one, a Chinese reduction of Treasurys could weaken the dollar and make US multinationals more competitive.

The official also said that US President Donald Trump is interested in meeting with Chinese President Xi Jinping at the upcoming G-20 Osaka summit set for June 28-29.

Trade rattled financial markets again, with stocks sinking for the fifth time in six sessions since China's defiance of Trump's warning not to retaliate for his imposition of higher tariffs Friday escalated the skirmish, driving demand for havens from gold to the yen while punishing risk assets.

Gold prices surged on Monday to a one-month high on what some analysts attributed to "safe-haven" buying in response to a steep plunge in US equity markets.

China said the U.S. should take full responsibility for the setbacks because it raised tariffs on the country's products, according to an article published Monday in the People's Daily, the flagship newspaper of China's Communist Party, according to state television. China's finance ministry said early on Monday it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a target list worth about $60 billion.

The idea that China would dump its $1.1 trillion of Treasuries to retaliate against USA tariffs is often dismissed as improbable. Here are some notable events coming up this week: Earnings this week include Alibaba, Tencent, Cisco, Nvidia.China industrial production and retail sales are slated for Wednesday, the same day as USA retail sales and industrial production.Bank of Indonesia has an interest rate decision on Thursday.Australian unemployment is out on Thursday. Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin also make appearances.

China industrial production and retail sales are slated for Wednesday, same day as USA retail sales and industrial production.

Bank of Indonesia has an interest rate decision on Thursday.

Australian unemployment is out on Thursday.

The Stoxx Europe 600 Index gained 1 per cent.

The MSCI Asia Pacific Index sank 0.7 per cent. The offshore yuan held at 6.9079 per dollar.

The MSCI Emerging Market Index decreased 0.1 per cent.

Germany's 10-year yield dipped two basis points to -0.07%. Currencies The yen was at 109.63 per dollar after falling 0.3%.

The euro bought US$1.1236, little changed.

The Aussie lost 0.3 per cent to 69.81 United States cents. Bonds The yield on 10-year Treasuries remained at 2.41%.

Gold increased 1% to $1,300.10 an ounce. West Texas crude rose above US$61 (S$84.5) a barrel.



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