U.S. President Donald Trump applauds while delivering a State of the Union address to a joint session of Congress at the U.S. Capitol in Washington, D.C., U.S(Photographer: Win McNamee/Pool via Bloomberg)

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U.S. President Donald Trump announced his much-anticipated tariff measures against China as stocks tank and bonds surge. Here are some of the things people in markets are talking about.

China Tariffs

President Donald Trump took the biggest economic gamble of his presidency, ordering sweeping tariffs on Chinese goods in a move that could escalate already tense trade relations between the world’s two biggest economies. The president instructed U.S. Trade Representative Robert Lighthizer to levy tariffs on at least $50 billion in Chinese imports. “We don’t want a trade war,” China’s ambassador to the U.S., Cui Tiankai, said in a video posted to the embassy’s Facebook page. “But we are not afraid of it.” There are a lot of ways China could hit back. Here are some of the U.S. targets most vulnerable to Chinese retaliation.

Markets Tumble

Asia markets are opening following a session in which U.S. stocks tumbled the most in six weeks and Treasuries rallied. Investors' focus shifted from the Federal Reserve to the threat of an escalating trade war with China that has the potential to disrupt global growth. The benchmark S&P 500 Index slumped the most since early February and the Dow Jones Industrial Average lost more than 700 points. The 10-year Treasury yield slid toward 2.8 percent and the yen advanced as investors sought safe havens. Facebook Inc. helped pace a decline in the tech sector, falling 2.7 percent. But if you think things look bad in the U.S. tech complex, it’s even worse among Chinese firms. The Guggenheim China Tech ETF plunged more than 5 percent Thursday,  the most since 2015.

Trump Tests Abe's Limits

After 16 months of warm words, lavish gifts and rounds of golf, Japan’s Shinzo Abe may be discovering the limits of personal rapport with Donald Trump. The prime minister is planning a hastily arranged trip to Washington next month after two surprise announcements by the U.S. president: That he’d meet their mutual adversary Kim Jong Un, and levy tariffs on Japanese steel and aluminum. The moves could shake the pillars of trade and security that underpin a 70-year-old alliance Abe was counting on to buttress against a rising China.

Arresting Development

A South Korean court ordered the arrest of former President Lee Myung-bak over allegations of bribery. Lee became the second former leader of Asia’s fourth-largest economy to face jail time in just over a year. Park Geun-hye, his successor from the same conservative party, was removed from office last year after being impeached over a corruption scandal that engulfed the entire country from late 2016. Lee, the president from 2008 to 2013, is suspected of taking a total of 11 billion won (about $10 million) in bribes from entities including the national spy agency, Samsung Group and the former chairman of Woori Finance Holdings Co., according to Yonhap News. Lee previously denied most of the dozen or so allegations.

Coming Up...

Asian equity traders face a rough start after the hammering stocks took stateside. Australian bond investors may be wondering just how much further 10-year yields can go below Treasuries as the gap nears 20 basis points. China's earnings season ramps up with Sinopec, China Merchants Bank and China Shenhua Energy, the top three by market cap among those reporting. Also on the radar will be CPI data coming from Japan and Singapore, and Taiwan industrial production. Europe's day will feature a Russian interest rate decision, Danish retail sales, Spanish PPI and Norwegian unemployment. The American session's data docket will include Brazilian inflation and current account figures, as well as U.S. durable goods and new home sales. And the deadline arrives yet again for Congress to avoid a government shutdown.

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To contact the author of this story: Joanna Ossinger in New York at jossinger@bloomberg.net.

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