Global stocks deepen losses as U.S. brands China currency manipulator

TOKYO (Reuters) – Global stocks extended their already substantial losses and the offshore yuan hit an all-time low on Tuesday after Washington designated Beijing a currency manipulator in a rapid escalation of the U.S.-China trade war.

U.S. Treasury Secretary Steven Mnuchin said on Monday the government had determined that China is manipulating its currency, and that Washington would engage with the International Monetary Fund to eliminate unfair competition from Beijing.

The Trump administration’s dramatic move against China hastened the risk aversion seen in global markets this week. On Monday, China let the yuan slide in response to the latest U.S. tariff, which is expected to further aggravate trade tensions between the world’s two largest economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.75% to its lowest since January.

Japan’s Nikkei .N225 shed 2.8%, Australian stocks fell 1.8% and South Korea’s KOSPI .KS11 slid 2.5%.

S&P 500 futures ESc1 fell 1.3% in early Asian trade. Wall Street’s major indexes already posted their biggest percentage drop of the year on Monday on fears of escalation in the U.S.-China trade war.

MSCI’s All Country World Index .MIWD00000PUS, which tracks shares in 47 countries, extended last week’s slide and has slumped 2.5% to a two-month low on Monday.

China’s offshore yuan stretched the previous day’s big slide and weakened to 7.1288 CNH=D4, a fresh record low since international trading on the Chinese trade began.

The yen, a perceived safe-haven in times of market turmoil and political tensions, rose 0.4% to a seven-month high of 105.520 JPY=.

Investor demand for other safe-havens such government bonds also remained high as risk aversion gathered momentum.

The 10-year U.S. Treasury yield US10YT=RR extended sharp falls overnight and declined to 1.685%, its lowest since October 2016.