President Donald Trump on One Event - Photo from Donald Trump's Twitter

JAKARTA (TheInsiderStories) – Asian markets extended last week’s worldwide plunge as investors fret that Donald Trump’s controversial tariffs on $60 billion of Chinese goods will spark a trade war that would hammer the global economy.

Wall Street’s three main indexes, which tumbled for a second successive day on Friday, and Asian investors — who fled to the hills last week — continued to sell on Monday.

In early trade Hong Kong was down 0.3 per cent, Tokyo went into the break 0.4 per cent lower and Shanghai sank more than one percent. Singapore fell 0.5 per cent and Sydney gave up 0.6 per cent while Wellington was one per cent off.

Taipei, Manila and Jakarta also fell but Seoul climbed 0.2 per cent as it emerged that South Korea and the United States have reached an understanding on revising their free-trade agreement and on steel tariffs.

Fears of a trade war continue to weigh on the dollar, which was struggling below 105 yen — its lowest level since November 2016 when Trump was elected.

The weaker dollar provided support to oil prices, though, as it makes the commodity cheaper for anyone holding other currencies.

Both main contracts ticked up on Monday, having surged last week on speculation that Bolton will press Trump to tear up the Iran nuclear deal, which could spark turmoil in the Middle East.

US Treasury Secretary Steve Mnuchin said at the weekend that Trump was not ready to back down but added that he had “very productive conversations” with Chinese officials on the issue.

Trump’s announcement came weeks after he unveiled tariffs on the import of steel and aluminum products as he presses on with his “America First” protectionist programme.

Beijing did not rule out cutting back its purchases of US Treasuries, which are crucial to keep the wheels of the world’s top economy greased. China is the biggest buyer of Treasuries.

The US move to impose levies, claiming China is breaching intellectual property rights, sparked a rout of equities across the world, while China warned it was “not afraid of a trade war”.

China on Monday launched yuan-denominated oil futures contracts, marking the first time foreign investors will have access to the assets in the country as the world’s top crude importer seeks greater influence over global prices.

However, analysts said they are unlikely to challenge New York and London-based futures in the short-term owing to Chinese capital controls and the entrenched position of the dollar-denominated contracts.