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Asian stocks follow Europe down, as fears grow over global economy
HONG KONG, Nov 23, 2018 (BSS/AFP) – Fresh fears over headwinds facing the
global economy saw Asian stocks follow Europe into the red Friday, in light
holiday trading after US markets were closed for Thanksgiving.
Investors brushed aside claims from Donald Trump he was hopeful of
resolving the bitter trade dispute between the US and China, with the
American president set to meet his Chinese counterpart Xi Jinping at the G20
in Argentina next week.
“China wants to make a deal. If we can make a deal, we will,” Trump said,
adding he was “very prepared” for the meeting.
But the fractious recent APEC summit — which for the first time ever
failed to issue a joint statement after US-China trade tensions boiled over –
– has set an ominous tone for the high-stakes summit in Buenos Aires.
The world’s top two economies have been locked in a trade war for months,
with the US imposing punitive tariffs on Chinese goods worth $250 billion per
year. In retaliation, China imposed tariffs on $110 billion of US goods.
Washington has threatened to toughen measures even further if the issue is
not resolved before January.
Speculation is growing that the People’s Bank of China will again cut the
level of cash that banks must hold in reserve, in a fresh bid to lower
financing costs and blunt the economic impact of the trade dispute with the
US.
“The (Chinese) central bank is worried about external shocks in the wake
of the cantankerous APEC summit which highlighted a considerable political
divide,” said Stephen Innes, head of Asia-Pacific trade at trading group
Oanda.
“But moves are unlikely to be substantial given the local markets are
effectively in holiday mode.”
– Bearish mood –
With markets in Japan and India closed for holidays, Hong Kong, Taipei,
Seoul and Singapore all chalked up losses on Friday morning, as Asian stocks
headed for a third week in the red.
Shanghai was the biggest loser, shedding over one percent, while Sydney
was a rare bright spot.
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Asia-Pacific markets were also warily eyeing the prospect of financial
conditions tightening with the Federal Reserve poised to keep hiking interest
rates.
With New York markets shut Thursday for Thanksgiving, London, Paris and
Frankfurt all closed down, with the FTSE dragged lower by the strengthening
pound.
The UK currency jumped after Britain and the European Union struck a
crucial draft deal on post-Brexit ties, ending the European session more than
half a percent higher against both the dollar and the euro.
The pound held onto its gains even as huge uncertainty remains over how
the Brexit endgame will play out.
But analysts said many traders were biding their time.
“Asian currencies gained slightly on the open, though there was a lack of
any meaningful driver given the US Thanksgiving holidays,” Khoon Goh, head of
Asia research at ANZ in Singapore, told Bloomberg News.
“Currencies are also likely to stay within current ranges ahead of the
Trump-Xi meeting next week, which could provide a deeper move depending on
the outcome.”
The bearish mood was exacerbated by fresh falls in crude prices as traders
took fright over risks of oversupply.
“The overhang from swelling US inventories which remain freshly minted in
trader minds suggests the massive crude glut continues to outweigh OPEC
output cut,” Innes said.
On other commodity markets, gold’s safe haven status saw the precious
metal remain firm.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: Closed for holiday
Hong Kong – Hang Seng: DOWN 0.7 percent at 25,835.31 points
Shanghai – Composite: DOWN 1.4 percent at 2,608.70 points
Euro/dollar: UP at $1.1409 from $1.1400 at 1700 GMT Thursday
Pound/dollar: UP at $1.2878 from $1.2866
Dollar/yen: DOWN at 112.95 yen from 113.00 yen
Oil – West Texas Intermediate: UP 3 cents at $53.87 per barrel
Oil – Brent Crude: DOWN 25 cents at $62.56 per barrel ($62.81)
New York – Closed for national holiday
London – FTSE 100: DOWN 1.3 percent at 6,960.32 points (close)
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