Hang Seng Index, CSI 300, US-China trade tensions

Markets across the Asia-Pacific region fell on Monday after China and the United States tightened trade restrictions and exchanged new accusations, reigniting tensions between the world’s two largest economies.

Hong Kong’s Hang Seng Index fell 3.41%, while mainland China’s CSI 300 Index fell 1.76%.

The Chinese offshore yuan strengthened 0.1% to 7.1267 against the greenback. The yield on 10-year Chinese government bonds fell more than 5 basis points to 1.752%.

China said on Sunday “we are not afraid” of a trade war with the United States after President Donald Trump pledged to impose new retaliatory tariffs on Chinese imports.

A spokesperson for China’s Commerce Ministry accused the United States of “double standards” with Trump’s promise Friday to impose additional 100% tariffs on such imports after China imposed new export controls on rare earth minerals.

Recent policy announcements could indicate that China intends to push for greater concessions from the United States, Goldman Sachs wrote in a note on Sunday.

Chinese exports grew at the fastest pace in six months in September, while imports recorded their biggest rise in more than a year, although a trade deal with the United States remains uncertain.

Exports rose 8.3% in September in U.S. dollar terms from a year earlier, Chinese customs data showed on Monday, beating estimates from economists polled by Reuters who had forecast a 7.1% rise and rebounding from a six-month low in August.

The Australian ASX/S&P 200 lost 0.68%. South Korea’s Kospi plunged 2.35% and the small-cap Kosdaq 2.24%.

Singapore’s benchmark index fell 1.5%.

Japanese markets are closed for the holidays.

In an article published Sunday by Truth Social, Trump suggested to investors that the president might not follow through on his threat to issue a “massive tariff increase” on China.

The comment Friday brought the U.S.-China trade war back into the spotlight and sent stocks tumbling in a rout that wiped out $2 trillion in market value.

“Don’t worry about China, everything will be fine! The highly respected President Xi just had a bad time. He doesn’t want a depression for his country, and neither do I,” Trump wrote. “The United States wants to help China, not harm it.”

In the United States on Friday, all three major U.S. averages fell.

Stocks accelerated their closing sell-off, with the Dow Jones Industrial Average closing down 878.82 points, or 1.9%, at 45,479.60. The S&P 500 lost 2.71% to 6,552.51, while the Nasdaq Composite fell 3.56% to 22,204.43. The drop in the general index is the largest since April 10.