Asia-Pacific stocks started the week lower following U.S. saber-rattling on trade and Sunday’s Italian elections that resulted in no clear winner.

Hong Kong’s Hang Seng Index HSI, -2.06% fell 2.3%, while the Nikkei Stock Average NIK, +0.17% shed 0.7%, with metals-related stocks extending declines on fears of a U.S.-led global trade war.

Also pressuring Japanese equities again was fresh strength for the yen, which was broadly up about 0.25% Monday morning versus other major currencies. It was around ¥105.50 per dollar USDJPY, +0.23% after sitting at its strongest level in 16 months in late New York trading Friday.

The euro was slightly higher against the U.S. dollar and British pound. The common currency strengthened after Germany’s Social Democrats voted to support a coalition government, allowing Angela Merkel to serve a fourth term as chancellor. The single currency initially eased as Italian results showed a likely hung parliament.

Italian exit polls so far suggest a series of potential coalitions that would find it difficult to agree, said Megan Greene, chief economist at Manulife Asset Management. The results were likely to produce a “messy confusion,” she added, though that had largely been anticipated by investors. “We may see a little volatility and a moderate rise in Italian yields.”

In other Asian stock markets, South Korea’s Kospi 180721, -0.95% fell 1.1% as index heavyweight Samsung Electronics 005930, -0.16% dropped 1.8%. Australia’s benchmark XJO, -0.71% fell 0.6%, Singapore’s index STI, -0.48% lost 1.2% and early gains in Taiwan were lost by midmorning. The Shanghai Composite closed up 0.1%.

Earlier Monday, China’s government said its 2018 economic-growth target would remain around 6.5% for 2018 as it predicted a reduced budget deficit. It also said it would cut excess capacity in the steel sector by 30 million metric tons and by 150 million in coal

China avoided setting an explicit growth target for credit for the first time this century, said Hao Zhou, senior emerging markets economist for Asia at Commerzbank. This is also the first time since 2012 that China has reduced its deficit target.

“China has set a generally tightening policy tone for the coming year, and financial deleveraging will take the center stage,” he said. “As such, we believe that the market has somewhat underpriced the downside risks for China’s economy this year.”

Still, China’s goals of pursuing growth and curbing leverage would likely prove more difficult to manage this year given the threat of trade protectionism, said Patrick Bennett, head of macro strategy for Asia at CIBC.