US stock futures, Asian shares slip as Trump puts new tariffs on China

U.S. stock futures took a knock as well, with E-Minis for S&P 500 ESc1 and the Dow Minis both down 0.2 percent.

U.S. President Donald Trump imposed 10 percent tariffs on about $200 billion worth of Chinese imports, and warned of tariffs on more goods if China took any retaliatory action.

Trump spared smart watches from Apple and Fitbit and other consumer products such as bicycle helmets and baby car seats.

“The announcement dashes hopes of any trade negotiations between two rivals. Be prepared for a prolonged period of risk-off,” analysts at ING said in a note.

“Although the levy saw a lower rate, it could foment a response from China who had previously threatened to walk away from the negotiating table,” it said.

Chinese Vice Premier Liu He is set to convene a meeting in Beijing on Tuesday morning to discuss the government’s response, Bloomberg News reported, citing a person briefed on the matter.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent with Hong Kong's Hang Seng index off 0.7 percent and Australian stocks down 0.4 percent.

Chinese shares were largely unchanged while Japan's Nikkei bucked the trend, gaining more than 1.5 percent.

Some analysts said the market reaction was a bit muted because Tuesday’s announcement was in line with expectations and was baked into the prices, while others see the U.S. economy riding out the impact for now.

Investors were also bracing for Beijing’s response.

“Tariffs on another $200 billion will mean about 12 percent of U.S. imports have seen a tariff hike. That means an average tariff increase of 1.6 percent across all imports, so tiny compared to the 1930s, when they were 20 percent,” said Shane Oliver, chief economist at AMP Capital Investors in Sydney.

“I still don’t see a resolution between China and the U.S. until after U.S. mid-terms elections in November to early 2019.

“In the currency market, the dollar index gained briefly against a basket of major currencies but was last unchanged at 94.465. 

Against the yen, the greenback inched up 0.1 percent to 111.98.

The risk-sensitive Australian dollar shed as much as 0.5 percent on the tariff news to near a recent 2-1/2 year low, then it changed direction and was up 0.2 percent at $0.7194.

The euro gained a fraction to $1.1692.

The tariff announcement drove some investors to the safety of U.S. Treasuries with 10-year yields coming off Monday’s four-month top of 3.0220 percent. They were last at 2.9940.

Oil prices fell on worries rising trade tensions could dent global crude demand.

U.S. crude futures CLc1 skidded 25 cents to $68.67 a barrel while international benchmark Brent futures LCOc1 lost 42 cents to $77.63 per barrel.

Copper, considered a barometer of global growth, drifted lower for a third session running.