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Asian equity markets fell sharply overnight as investors digested Donald Trump applying a new series of broad trade tariffs.

The US president set duties ranging from 10 percent to 12.5 percent on numerous nations including the United Kingdom, Mexico, Canada, Australia, India, China and the full European Union bloc.

This measure supplants the uniform 10 percent tariff introduced in February after the US supreme court ruled many prior tariffs unlawful.

Japan's Nikkei 225 index fell 3.1 percent, China's SSE Composite slipped 1.4 percent, Hong Kong's Hang Seng dropped 11.4 percent and South Korea's Kospi lost 6.2 percent amid heavy selling in chip-related stocks.

The tariffs are expected to be enacted under section 301 of the Trade Act of 1974 targeting nations involved in forced labor practices, following earlier pledges to probe unfair trade and lock in permanent duties.

US trade representative Jamieson Greer stated that the United States has long enforced a forced labor import ban and urged partners to match that standard while welcoming those already adopting similar rules.

Rising oil prices added pressure, with Brent crude reaching 100 dollars a barrel after renewed Middle East tensions raised supply concerns.

Investors were also unsettled by declines in major US technology shares linked to AI spending worries and disappointing Tesla earnings.

The agenda

7am BST: ONS retail sales data

Trump's latest tariffs present a mixed outlook for UK firms, according to the British Chambers of Commerce. William Bain noted that most exporters to the US face no immediate cost changes, welcomed the removal of whisky tariffs and highlighted protections for autos, pharmaceuticals, steel and aluminium under the Economic Prosperity Deal, while expressing concern over lost competitive edges versus the EU and further probes into digital service taxes.

China warns trade wars not in interests of any party

China cautioned that trade wars harm all sides after the fresh US tariffs on more than 80 countries. Foreign ministry spokesman Lin Jian opposed unilateral tariff actions and stated that such conflicts serve no party's interests. Chinese markets reacted with the SSE Composite falling 1.6 percent and the Hang Seng declining 1.1 percent amid trade and oil price worries.

European stocks dip at the open

European markets opened mixed, with the Stoxx Europe 600 down 0.1 percent led by energy losses, while the FTSE 100 rose 0.2 percent buoyed by 3i Group gains of 3.5 percent. Wise shares dropped 9 percent after its US banking licence application was rejected, though operations continue unaffected and a new filing is planned.

UK retail sales unexpectedly rise in June

UK retail sales climbed 1 percent in June, beating forecasts of a 0.3 percent drop and building on May's 1.2 percent gain, aided by warm weather and World Cup interest. Online sales reached 29.4 percent, the highest since April 2021. Consumer confidence recovered to pre-conflict levels per GfK, yet the British Retail Consortium warned of upcoming pressures from Middle East tensions, tight household budgets and rising costs, urging government action on energy levies.

Oil slipping back below 100 dollars

Brent crude eased 0.9 percent to 99.8 dollars a barrel but remains more than 10 percent higher for the week due to Middle East supply fears, including Houthi threats to Saudi exports through the Bab al-Mandab strait.

Trump's new tariffs create uncertainty for world trade, Bank of France governor says

Bank of France governor Emmanuel Moulin said the tariffs add uncertainty to the world economy and should respect the 2025 Turnberry trade deal with the EU, noting limited direct impact on Europe yet clear risks to global growth and trade.