Feb 3 (Reuters) - Preview of trading in Asian markets on Monday.
Asia initiates what's expected to be a pivotal day across global markets following the President's implementation of tariffs on imports from Mexico, Canada, and China into the United States.
Investors face the anticipated impact on economic growth and financial assets, prompting speculation on their response as the day unfolds.
Potential market sentiment shifts could pose challenges for Asia, while Japanese government bonds might maintain stability.
Early indications show Australian, Japanese, and South Korean stock futures pointing to a lower open on Monday, with bitcoin dropping by 3%. The U.S. dollar exhibits strength, reaching a 22-year high against the Canadian dollar and pressuring the euro towards parity.
Gold is poised to reach new highs, while U.S. Treasuries face uncertainty between safe-haven demand and concerns over inflationary pressures from the tariffs.
The White House confirmed the enforcement of 25% duties on imports from Mexico and Canada, and a 10% levy on Chinese goods starting February 2, with the duration of these measures unclear.
Canada has responded, leaving attention on China's possible actions post-Lunar New Year holidays. Market watchers eye Beijing's next yuan fixing for insight on their strategy.
Investors have shown support for Trump's policies aiding U.S. economy and stocks but remain wary of their impact on growth.
The tariffs on Mexico and Canada draw criticism as both are key U.S. allies. The tariffs cover $1.3 trillion of goods, over 40% of U.S. imports, surpassing those targeted in Trump's initial term, mainly from China.
Analysts emphasize the need to recalibrate trade war risk premiums given concerns of recessions in Canada and Mexico, increased U.S. inflation, and a potential halt to interest rate cuts by the Fed.
Tightening U.S. monetary policy and a more hawkish Fed could spell trouble for Asia and emerging markets.
Key market updates on Monday include reactions to U.S. tariffs, unofficial Chinese manufacturing PMI for January, and Indonesia's inflation data for the same period.