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ASIA-MARKETS-UPDATE
Asia stocks mixed after Mnuchin’s weekend of triage
HONG KONG, Dec 24, 2018 (BSS/AFP) – Asian stocks were mixed Monday after a
weekend call by Treasury Secretary Steven Mnuchin to top US banking
executives aimed at stemming the market panic which resulted in Wall Street
experiencing its worst week in a decade.
The Dow and the Nasdaq ended Friday with their biggest weekly drop since
the start of the global financial crisis as investors took fright over a
government shutdown in Washington, President Donald Trump’s public feuding
with the Federal Reserve and the US-China trade war returning to the
forefront.
Hong Kong and Seoul both dropped in Monday’s trading while Sydney and
Shanghai closed up. Tokyo was closed for a public holiday.
The mixed regional bag came after Mnuchin spent much of the weekend in
damage control mode following multiple media outlets reporting that Trump had
privately asked cabinet members if he has the authority to fire Fed Chairman
Jerome Powell.
Last week, the central bank hiked rates, infuriating Trump who has ignored
the traditional respect for the Fed’s independence, calling it “crazy”, “out
of control” and a greater economic threat than China.
Mnuchin denied the reports of Trump seeking Powell’s scalp, tweeting on
Saturday that the president told him: “I never suggested firing Chairman Jay
Powell, nor do I believe I have the right to do so.”
The following day, Mnuchin announced he had called senior executives from
six of the largest American banks to discuss the market turmoil and received
assurances.
“The banks all confirmed ample liquidity is available for lending to
consumer and business markets,” the Treasury said in a statement attached to
a tweet from Mnuchin announcing the calls.
“We continue to see strong economic growth in the US economy with robust
activity from consumers and business,” Mnuchin was quoted in the statement as
saying, adding that he would convene a call with the President’s Working
Group on financial markets later Monday.
– ‘More panic and fear’ –
Analysts expressed both surprise and alarm at Mnuchin’s Sunday statement,
saying it might do the opposite of calming current jitters.
MORE/HR/1440
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
“Nothing says don’t panic like saying ‘I’m calling the plunge protection
team tomorrow’,” Michael O’Rourke, JonesTrading’s chief market strategist,
told Bloomberg News.
“I honestly think that’s the type of event that’s going to startle markets
and create more panic and fear when it’s meant to create confidence.”
Last week’s turmoil in Washington — which included a government shutdown
that appears likely to last until at least Thursday and the abrupt
resignation of Defense Secretary Jim Mattis — has spooked markets worldwide.
Japan’s Nikkei hit a fresh 15-month low on Friday with its fourth
consecutive day of losses, joining the tech-rich Nasdaq in bear territory.
In European markets on Monday London and Paris were down 0.65 and 0.92
percent respectively in early morning trade while Frankfurt was up 0.21
percent.
Oil inched higher in Asian trade after crude-producing nations said they
expect prices will arrest their recent slide and rebalance early next year,
when a deal on new production cuts takes effect.
However, analysts said prospects for a global economic slowdown in the
coming year — which would weaken crude demand — and rising US shale output
are dampening sentiment and limiting any rebound from the current 15-month
lows.
Prices have plunged by around 40 percent from four-year peaks reached in
early October on concerns about oversupply and weaker demand.
In foreign exchange markets, the yen rose 0.1 percent to 111.10 per dollar,
the euro was up 0.2 percent at $1.1390 and the pound was at $1.2662, a 0.1
percent rise.
– Key figures around 0500 GMT –
Tokyo – CLOSED
Hong Kong – Hang Seng: DOWN 0.4 percent at 25,651.38
Shanghai – Composite: UP 0.43 percent at 2,527.01
Euro/dollar: UP at 1.1390 from at $1.1378
Dollar/yen: UP at 111.00 yen from 111.03
Pound/dollar: UP at $1.2662 from $1.2658
Oil – West Texas Intermediate: UP 43 cents at $46.02 per barrel
Oil – Brent Crude: UP 55 cents at $54.37 per barrel
New York – Dow: DOWN 1.81 percent at 22,445.37 (close)
London – FTSE 100: UP 0.1 percent at 6,721.17 (close)
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