HONG KONG, Oct 9, 2018 (BSS/AFP) – The sell-off in Asian markets slowed on
Tuesday, with markets seeing little movement as ongoing US-China tensions
simmer.
A testy public interaction between Chinese Foreign Minister Wang Yi and US
Secretary of State Mike Pompeo in Beijing on Monday refuelled market worries
about China-US relations, which have taken a hefty knock from tit-for-tat
tariffs.
“A possible train wreck on the negotiation front could completely derail
global markets,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“We should not underestimate the potentially destabilising effect… a
weaker yuan will have on regional markets, if not global markets.”
Adding to economic uncertainty Tuesday morning was a bearish report from
the International Monetary Fund, which lowered its forecast for Chinese
economic growth in 2019 and warned that escalating trade tensions would drag
on the world’s second-largest economy.
The IMF’s World Economic Outlook predicted China’s economy would grow 6.2
percent next year, down from an early forecast of 6.4 percent.
Both of those figures would mark the slowest rate of expansion for China
since 1990.
– ‘Sense of foreboding’ –
Stocks edged up in Hong Kong, rising by a modest 0.5 percent through the
morning.
After the biggest sell-off in three months on Monday Shanghai’s stock
market — which led the retreat following a week-long public holiday — saw
modest gains on Tuesday of 0.3 percent.
“For China to rally you really need the domestic picture to improve. The
external picture is unlikely to help much,” David Hauner, a cross-asset
strategist at Bank of America Merrill Lynch, told Bloomberg Television.
Tokyo stocks opened lower on Tuesday, as traders returned from a long
weekend, with stocks dragged down by a higher yen and worries over China.
The benchmark Nikkei 225 index fell 0.9 percent through morning trading,
following three straight days of falling stocks to Friday.
Other markets across Asia largely saw modest movement, with Taipei up 0.2
percent. But Sydney fell one percent.
“The relative calm in today’s Asia session belies the eerie sense of
foreboding that continues to hang over equity markets,” said Innes.
– Key figures around 0300 GMT –
Hong Kong – Hang Seng: UP 0.5 percent at 26,327.76
Shanghai – Composite: UP 0.3 percent at 2,725.72
Tokyo – Nikkei 225: DOWN 0.9 percent at 23,564.91 (break)
Euro/dollar: UP at $1.1518 from $1.1492 at 2100 GMT on Monday
Pound/dollar: DOWN at $1.3090 from $1.3115
Dollar/yen: UP at 113.94 from 113.66 yen
Oil – West Texas Intermediate: UP 22 cents at $74.52 per barrel
Oil – Brent Crude: UP 19 cents at $84.10 per barrel
New York – Dow Jones: UP 0.2 percent at 26,486.78 (close)
London – FTSE 100: DOWN 1.2 percent at 7,233.33 (close)