Asian Stocks Drop as Weak Chinese Lending Data and Tariff Threats Hit Markets

Asian stocks opened lower on Monday, following a positive week for Wall Street. The release of weak Chinese lending data and news of potential increased tariffs on US imports from China contributed to the negative sentiment. Japan’s Nikkei 225 decreased by 0.4%, and Hong Kong’s Hang Seng index rose slightly, buoyed by tech stock purchases. However, Shanghai’s Composite index dipped by 0.1%, following a third consecutive monthly increase in inflation and an 19th consecutive decrease in producer price index. Additionally, new loans fell significantly in April, and total credit shrunk due to reduced government bond issuances, indicating ongoing weakness in the real estate industry. Reports suggest the Biden administration may increase tariffs on items including electric vehicles, semiconductors, solar equipment, and medicinal supplies imported from China, raising shares of Chinese electric vehicle manufacturers BYD and NIO. In response to these developments, US stock futures were mixed, with oil prices falling. Treasury yields rose following a report suggesting US consumer sentiment is declining more than anticipated, potentially leading to worsening inflationary cycles. The US dollar edged up against the Japanese yen, while the euro remained relatively stable.