Major Asian markets closed sharply lower on Monday, the first trading day of the second half of the year, as heavy losses were recorded in China ahead of a looming deadline when tariffs from both Washington and Beijing are expected to take effect. In Tokyo, the sank in afternoon trade, closing down 2.21 percent, or 492.58 points, at 21,811.93. Losses were broad-based, with retailers and the food sector among the worst performers. Retail stocks were down 3.58 percent, with Fast Retailing lower by 2.87 percent. Over in Seoul, losses on the Kospi steepened through the day, with the index falling 2.35 percent to end at 2,271.54. Samsung Electronics gave up slight gains in the morning to slide 2.36 percent as losses in heavyweight tech and manufacturing plays dragged the index lower. Steelmaker Posco dropped 4.26 percent.

Elsewhere, the fell 2.52 percent to finish at 2,775.77, failing to sustain the slight rebound seen in the previous session, while the smaller Shenzhen composite lost 1.58 percent for the day. Blue chip companies recorded larger declines, with the CSI 300 index sinking almost 3 percent. The fresh declines came as the yuan continued to weaken, with the currency trading at 6.6503 to the dollar at 3:10 p.m. HK/SIN. Of note, the private Caixin/Markit PMI for China came out in line with expectations. The official manufacturing Purchasing Managers' Index released over the weekend had declined to 51.5, missing expectations of 51.6 in a Reuters poll. Down Under, the S&P/ASX 200 erased early gains, but saw narrower declines compared to other regional markets. The index closed lower by 0.27 percent at 6,177.80, with consumer stocks and gold producers recording the steepest declines. Markets in Hong Kong, meanwhile, were closed on Monday for a holiday. MSCI's broad index of shares in Asia Pacific excluding Japan edged down by 0.69 percent, but it remained above the nine-month lows it touched last week.

Looming tariffs