Asia: Markets fall after Trump criticises Fed rate hikes

[HONG KONG] Asian markets mostly tumbled on Friday tracking a fall on Wall Street after US President Donald Trump criticised the Federal Reserve's interest rate hikes amid lingering fears about a global trade war.

Mr Trump, in part of an interview aired by CNBC, broke with the long-established executive branch practice of not commenting on the Federal Reserve's decisions out of respect for its independence.

"I'm not thrilled," Mr Trump told the network in an interview excerpt aired on Thursday. "Because we go up and every time you go up they want to raise rates again."

"I'm not happy about it. But at the same time I'm letting them do what they feel is best."

Mr Trump also suggested that higher interest rates left the United States at a disadvantage when compared to the European Union, China and Japan, allowing their currencies to weaken as the US dollar strengthens.

"Currency is now part of the trade war folks," said Greg McKenna, chief market strategist at AxiTrader.

"And it is worth pondering whether this is a President who is going to break with 25-30 years of tradition in not interfering in Fed policy deliberations going forward.

"What I saw in that brief excerpt is a President who is going to drive his trade and tariff policy forward regardless of outside objections," Mr McKenna added.

DOLLAR TUMBLES

The dollar index fell immediately after the remarks were broadcast and on Friday morning, a stronger yen saw Tokyo shares edge down 0.5 per cent.

"Following falls in US shares and ahead of the weekend, sales for position-adjustment reasons are seen overwhelming the market," SBI Securities said in a commentary.

Hong Kong dropped 0.5 per cent while Shanghai edged down 0.1 per cent. But Singapore gained 0.5 per cent and Sydney advanced 0.4 per cent.

In Washington, automakers and suppliers at a public hearing on Thursday pleaded with Trump's administration to reject tariffs on vehicle imports, which they say could cripple domestic manufacturing and cause job losses.

Meanwhile in Brussels, EU Trade Commissioner Cecilia Malmstrom said the EU would "think out of the box" in a bid to find a solution, but she warned officials were preparing to respond with what she called "rebalancing measures" should the US follow through with the auto tariffs.

An EU source told AFP the retaliatory levies could be worth 10 billion euros (S$15.7 billion).

Mr Trump has slapped hefty import taxes on steel and aluminium from the EU, Canada and Mexico, in addition to imposing levies on goods from China worth tens of billions of dollars, sparking retaliatory tariffs and stoking fears of an all-out trade war.

AFP