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Asian markets track Wall St lower, China slashes growth target
HONG KONG, March 5, 2019 (BSS/AFP) – Asian markets retreated Tuesday as
investors awaited fresh developments in the China-US trade talks, while
Beijing lowered its growth forecasts for this year and unveiled massive tax
cuts to support the stuttering Chinese economy.
Equity investors tracked losses on Wall Street, where the global rally hit
a bump as optimism that the world’s top two economies are heading for a
tariffs deal was replaced by a need for clarity on any agreement.
Shares have enjoyed a blockbuster start to the year so far but OANDA senior
market analyst Alfonso Esparza, said: “Trade optimism could only take the
stock market so far.
“High level talks between the two largest economies have been ongoing and
although they appear close to bearing fruit, the fact remains that the
optimism has already been priced in. Details on the agreement will be needed
to unlock gains.”
In early trade, Shanghai was down 0.2 percent while Hong Kong slipped 0.6
percent and Tokyo headed into the break 0.6 percent lower.
Sydney eased 0.5 percent, Singapore was 0.4 percent off and Seoul gave up
0.7 percent with Taipei, Jakarta and Wellington also lower.
There was little major response early on from news that China had lowered
its growth target for this year to 6.0-6.5 percent, while announcing hundreds
of billions of dollars worth of tax cuts for firms to stimulate the economy.
– ‘Tough struggle’ –
Beijing will also increase spending, with the targeted fiscal deficit set
to increase to 2.8 percent of GDP, from 2.6 percent last year, while the
National People’s Congress is expected to pass laws next week regulating
foreign investment, in a move that could help ease US trade tensions.
The growth figure is below the 6.6 percent achieved in 2018 — which was
the slowest for three decades — and comes as the leadership struggles to
address a mounting debt crisis as well as the trade row.
MORE/MR/1040 hrs
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In a speech at the open of China’s annual rubber-stamp parliament, Premier
Li Keqiang warned the country “will face a graver and more complicated
environment as well as risks and challenges, foreseeable and otherwise, that
are greater in number and size”.
“We must be fully prepared for a tough struggle.”
However, Tai Hui, Asia-Pacific chief market strategist at JP Morgan Asset
Management, said the latest target indicated the leadership had learned from
the past.
It “reflects top officials’ maturity in accepting that China needs to
stabilise growth in a sustainable manner, instead of a rush of liquidity to
the economy, as we saw in previous downturns”, he said.
“They need to strike a balance between boosting economic activity and not
restart another debt-fuelled boom. It would be unrealistic to expect 2019 to
be stronger than 2018 considering global headwinds and some structural
challenges in the Chinese economy.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.6 percent at 21,690.06 (break)
Hong Kong – Hang Seng: DOWN 0.6 percent at 28,794.60
Shanghai – Composite: DOWN 0.2 percent at 3,021.64
Dollar/yen: UP at 111.81 yen from 111.72 yen
Euro/dollar: DOWN at $1.1334 from $1.1342 at 2140 GMT
Pound/dollar: DOWN at $1.3172 from $1.3179
Oil – West Texas Intermediate: DOWN 28 cents at $56.31 per barrel
Oil – Brent Crude: DOWN 26 cents at $65.41 per barrel
New York – Dow: DOWN 0.8 percent at 25,819.65 (close)
London – FTSE 100: UP 0.4 percent at 7,134.39 (close)
BSS/AFP/MR/1040 hrs