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Oil prices dive 4%, safe-haven currencies gain

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Wall St futures down nearly 2%, Nikkei tumbles 3%

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PBOC fixed the yuan at weakest level since Sept 2023

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New Zealand central bank cuts by 25 bps amid trade

uncertainty

By Stella Qiu

SYDNEY, April 9 (Reuters) - Stocks in Asia extended a

slide on Wall Street on Wednesday as President Donald Trump

looked set to press ahead with whopping 104% tariffs on Chinese

goods, pummelling oil prices to four-year lows as global

recession fears gripped financial markets.

The U.S. dollar fell against safe-haven currencies but the

offshore yuan hit a record low of 7.4287 per dollar

overnight. Fed fund futures jumped in early Asian trade

to imply around 115 basis points of interest rate cuts this

year, compared to 92 basis points early on Tuesday.

Overnight, Washington confirmed 104% duties on imports from

China would take effect after midnight on Wednesday.

The shifting headlines on tariffs and the spectre of a

prolonged trade war between the world's two biggest economies

sparked sharp volatility in financial markets.

The S&P 500 was swept up in one of the biggest reversals

in at least the last 50 years, with the benchmark index losing

4.2 percentage points from a positive start to a negative

finish. The index has lost $5.8 trillion in stock market value,

the deepest four-day loss since it was created in the 1950s.

Early in Asia, S&P 500 futures fell 1.5% while Nasdaq

futures dropped 1.7%. The pain likewise spread to Europe,

with EUROSTOXX 50 futures down 4.5%, while FTSE futures

lost 2.5%.

China's blue chips slipped 1.2% while Hong Kong's

Hang Seng index tumbled 3.1%. MSCI's broadest index of

Asia-Pacific shares outside Japan fell 1.7%.

Late on Tuesday, President Donald Trump said China was

manipulating currency to protect against tariffs, but he thought

China would make a deal at some point.

"U.S. and China are stuck in an unprecedented, and

expensive, game of chicken, and it seems that both sides are

unwilling to back down," said Ting Lu, chief China economist at

Nomura.

"Given the extraordinarily fluid situation, it is impossible

to reasonably estimate the impact of the ongoing U.S.-China

trade war on China's economy."

The onshore Chinese yuan was already down at 2023 lows

and much attention was on the mid-point fixing from the People's

Bank of China on Wednesday, which was set at 7.2066 per dollar,

the weakest level since September 2023.

Analysts at JPMorgan believed the rapid escalation with

U.S. tariffs on China were disruptive enough to push the global

economy into recession.

"Given the import bill from China, the China tariff alone

amounts to a whopping $400bn tax hike on U.S. households and

businesses," they said in a note to clients. "The currency is

likely to be a release valve for China policymakers."

Other stock markets in Asia were also deep in the red.

Japan's Nikkei tumbled 3.5%, after rallying 6% on

Wednesday on hopes that Tokyo may get some trade deal with the

U.S. Taiwanese stocks also fell 1.7% even though the

government activated a $15 billion stabilisation fund.

In the Treasuries market, longer-dated bond yields jumped in

part due to investors selling the safe-haven asset to cover

losses elsewhere. Short-end bonds, however, rallied as investors

priced in more easing from the Federal Reserve.

The benchmark 10-year yield rose another 5 basis

points to 4.335%, bringing the total rise over the past three

days to a whopping 34 bps.

Two-year yields fell 6 bps to 3.665%.

In currency markets, safe-haven currencies like the yen and

Swiss franc found some more love, with the dollar skidding 0.6%

to 145.36 yen and down 0.5% to 0.8430 Swiss franc

.

The kiwi rose 0.3% to $0.5550 after the Reserve

Bank of New Zealand

cut interest rates

by 25 bps to 3.5%, although it cautioned about downside

risks to the local economy from global trade barriers.

Oil prices dived over 4% on Wednesday on concerns about

demand from China. Brent futures plunged 3.9% to $60.36

a barrel, while U.S. crude futures also tumbled 4.4% to

$56.96 per barrel.

Gold struggled to regain its upward momentum and was last

down 0.2% at $2,03976 per ounce, about the lowest in a month.