According to Reuters, SingaporeThe dollar surged, Hong Kong shares fell from two-month highs, and U.S. stock futures trembled Tuesday as the U.S. and China tense financial markets with tit-for-tat tariffs that sparked fears of a wider, destructive trade war.



As prices fluctuated on news reports, Shane Oliver, chief economist at AMP (OTC:AMLTF) in Sydney, stated, "(The) trade war story remains alive and well and this has a lot more to play out."

After rising in relief after Mexico and Canada struck agreements to postpone a U.S. tariff, S&P 500 futures fell 0.2%. Europe's fears caused the euro to drop below $1.02 and European futures to drop 0.1%.

Both the Mexican peso and the Canadian dollar were subject to renewed selling pressure. [FRX/]

At 108.78, the dollar index was up 0.2% last time.

The Hang Seng in Hong Kong, which had risen to 2025 highs on hopes that China might also engage in talks with US President Donald Trump, trimmed gains to close around 2% higher.

At 0501 GMT, a further 10% U.S. tax on Chinese exports went into effect. A few minutes later, Beijing declared it was looking into Google (NASDAQ:GOOGL) and enacting tariffs on U.S. imports of vehicles, farm equipment, coal, petrol and oil starting on February 10.

"A lot of things are still up in the air. Jeff Ng, head of Asia macro strategy at SMBC in Singapore, stated, "I'm expecting increased USDCNH above 7.40, dollar strength, and increased uncertainty."

Following the implementation of U.S. tariffs, the more liquid Australian dollar, which is frequently used as a stand-in for the yuan, dropped 0.7% to $0.6180, while the offshore yuan plummeted to 7.3236 per dollar.

Investors are watching where China fixes the currency trading band on Wednesday morning for hints about its bargaining posture as Chinese markets stay closed for the Lunar New Year holiday.


Trump will meet with Chinese President Xi Jinping in the next days, according to his press secretary, although it is unclear where they will agree, unlike the North Americans.

Naka Matsuzawa, chief macro strategist at Tokyo-based Nomura, stated, "It's a completely different story because it (China) is an economic rival as well as a political rival."

"Unless China makes huge concession economically, I really don't think Trump will stop this tariff."

THE UNLEASHED UNCERTAINTY

A week filled with significant company profits has gotten off to a tumultuous start due to Trump's changing trade policies. Cryptocurrencies have been agitated after the Canadian dollar saw its largest one-day fluctuation since the epidemic began on Monday.

Due to selling pressure, Bitcoin dropped 3% to $98,750. Due to investor unease, safe-haven gold reached near-record highs, while benchmark 10-year Treasury rates increased 3 basis points to 4.57%, putting some pressure on bonds.

"It will be difficult to reverse the rise in policy uncertainty," said Michael Feroli, chief U.S. economist at J.P. Morgan.

"For the Fed, the weekend's developments will likely reinforce their inclination to sit on the sidelines and to remain below the radar as much as possible."

With fourth-quarter profits that above projections, UBS Group declared a buyback. Despite lowering this year's profit estimate, BNP Paribas (OTC:BNPQY) also exceeded earnings projections.

Following Tuesday's close of U.S. markets, Google releases a report that comes under fire for its enormous AI expenditures.


Brent futures hit a one-month low of $75.03 a barrel as oil prices, which had surged on Monday, began to decline.