Asian shares lower, $US up as Trump vows tariffs

The US dollar rallied on Tuesday while European shares fell after US President-elect Donald Trump pledged tariffs on all imports from Canada and Mexico, and additional tariffs on China.

European equities dropped, led by steep declines in automaker stocks, one of the potential losers from any Trump-imposed tariffs on the European Union.

The Mexican peso and Canadian dollar came under fire, while the euro also wilted.

"The dollar's had a knee-jerk move higher, the Canadian dollar's softer, the peso is softer and the equity reaction - particularly in Europe - makes sense," Pepperstone senior market strategist Michael Brown said.

"Because the market's thinking, 'well, what's the one country or the one bloc that's likely to be next? It's probably going to be the EU. So naturally you're going to be short European equities this morning," he said.

The STOXX 600 fell 0.7 per cent in early trade, with shares like Volkswagen and Stellantis - the maker of Chrysler, Dodge and Fiat - down 2.6 to five per cent.

US S&P 500 futures eased 0.1 per cent following a 0.3 per cent gain in the cash index overnight.

The weekend nomination by Trump of Scott Bessent as Treasury Secretary triggered a wave of positive sentiment on Monday that boosted stocks and bonds, as the fund manager is viewed as a voice for Wall Street in Washington.

But Tuesday's tariff announcement undid much of that optimism.

"It's almost as if Trump wants to remind markets who is in control, after nominating Scott Bessent as Treasury Sec - a man markets expected to cool Trump's potency," said Matt Simpson, senior market analyst at City Index.

"With the Canadian dollar rising against the Mexican peso, markets are assuming this will hit Mexico the hardest."'

Asian stocks fell broadly on Tuesday. Chinese and Hong Kong markets ended largely unchanged amid expectations that Chinese fiscal stimulus will help counter the impact of the tariffs. China is set to hold two top political meetings in December, where authorities could ramp up stimulus.

China's Shanghai Composite index slipped 0.12 per cent to 3,259.76 and Hong Kong's Hang Seng index finished marginally higher at 19,159.20 ahead of Chinese industrial profit data and purchasing managers index numbers due this week.

Japanese markets fell sharply, with a stronger yen and tariff concerns keeping investors nervous. The Nikkei average dipped 0.87 per cent to 38,442 ahead of November inflation numbers from the Tokyo region due later in the week.

The broader Topix index settled 0.96 per cent lower at 2,689.55. Tech giants Advantest, Tokyo Electron and Screen Holdings lost two to four per cent.

Seoul stocks ended lower ahead of a Bank of Korea interest-rate decision on Wednesday. The Kospi average dropped 0.55% to 2,520.36, snapping a two-day winning streak with bio and financial shares facing significant selling pressure.

Australian markets snapped a three-day winning streak, with energy, financials and material stocks leading losses. The benchmark S&P/ASX 200 fell 0.69 per cent to 8,359.40 after hitting a record high in the previous session. The broader All Ordinaries index closed 0.56 per cent lower at 8,612.60.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index closed down 0.62 per cent at 13,113.76 ahead of a RBNZ rate decision on Wednesday, with markets expecting a 50-basis point cut to the official cash rate.

Bitcoin fell one per cent to $US92,781, easing further from last week's record high at $US99,830. The token has benefited from speculation of an easier regulatory environment for cryptocurrencies under Trump.

Gold succumbed to the dollar's strength, dipping to a one-week low of $US2,604.99.

Oil prices recovered slightly from the previous session's 2.8 per cent drop as investors mulled the implications of a potential ceasefire between Israel and Hezbollah.

Brent crude futures rose 0.6 per cent to $US73.41 a barrel, while US West Texas Intermediate crude futures rose 0.45 per cent to $US69.25 a barrel.

with DPA