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ASIA-MARKETS-UPDATE
Most Asia markets down as dealers spooked by trade, Brexit
HONG KONG, March 20, 2019 (BSS/AFP) – Asian markets mostly fell Wednesday
with nervous investors keeping tabs on developments in China-US trade talks
and the Brexit saga, while awaiting the conclusion of a key Federal Reserve
meeting.
General optimism about the outlook for the tariffs negotiations has helped
propel equities higher across the world this year — offsetting concerns
about the outlook for the global economy — with both Washington and Beijing
sounding broadly positive.
But dealers have been spooked by a report that some US officials are
feeling some pushback from China on a number of demands, including on the
crucial issue of intellectual property.
The unnamed negotiators said the Chinese side was growing concerned at the
lack of assurances that US duties would be removed, according to the
Bloomberg story.
While the report also said the resistance was regarded by some as a normal
part of talks, it highlighted their fragile nature, with fears already raised
earlier this month by the delay of a flagged signing summit between President
Donald Trump and his Chinese counterpart Xi Jinping.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven
Mnuchin will return to Beijing next week to resume talks.
Hong Kong dropped 0.5 percent after a four-day rally, while Shanghai
closed marginally down.
Sydney fell 0.3 percent, Singapore was off 0.4 percent and Seoul flat.
However, Tokyo recovered from an early sell-off to end 0.2 percent higher,
while Taipei, Manila and Jakarta also rose.
– ‘Political, economic costs’ –
Adding to unease on trading floors is continued uncertainty surrounding
Britain’s drawn-out departure from the European Union.
Prime Minister Theresa May is expected to ask the bloc for an extension of
the March 29 deadline for leaving, having seen her exit proposals killed off
by MPs.
However, EU top negotiator Michel Barnier said any delay would have
“political and economic costs” for the bloc’s remaining 27 states.
MORE/HR/1445
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
“A long extension… should be linked to something new, a new element or
new political process,” he told reporters, while reports said May could be
considering another general election or even a second referendum.
Observers expect the exit date to be put back but there is a concern that
it could be rejected, leaving Britain to crash out of the EU without a deal,
which many warn could be devastating for the economy.
European Commission President Jean-Claude Juncker said Wednesday it was
unlikely leaders would reach a decision on Brexit at this week’s summit in
Brussels.
Despite the turmoil, the pound continues to hold its own against the
dollar, with a long extension considered positive for the unit, though
observers remain on edge.
“For now, the pound appears to be reflecting the optimism of the market
that common sense will prevail. However… that is a big assumption given the
current febrile political atmosphere,” said Michael Hewson, chief market
analyst at CMC Markets UK.
The Fed’s March policy meeting concludes later in the day, with analysts
predicting it will announce a slower pace of interest rate hikes — to one
from the two previously tipped — as the economy shows signs of softening.
Bank boss Jerome Powell’s post-meeting comments will be pored over for
some forward guidance.
But OANDA senior market analyst Alfonso Esparza warned: “A more-dovish-
than-expected (statement) could spook investors and see them headed for safe
havens if growth expectations are low at the same time as uncertainty on
Brexit and the US-China trade deal are on the rise.”
In early trade London fell 0.3 percent, Paris slipped 0.2 percent and
Frankfurt shed 0.7 percent.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 21,608.92 (close)
Hong Kong – Hang Seng: DOWN 0.5 percent at 29,320.97 (close)
Shanghai – Composite: FLAT at 3,090.64 (close)
London – FTSE 100: DOWN 0.3 percent at 7,301.59
Pound/dollar: DOWN at $1.3258 from $1.3268 at 2100 GMT
Euro/pound: UP at 85.61 pence from 85.55 pence
Euro/dollar: DOWN at $1.1349 from $1.1351
Dollar/yen: UP at 111.54 yen from 111.40 yen
Oil – West Texas Intermediate: DOWN six cents at $58.97 per barrel
Oil – Brent Crude: UP eight cents at $67.69 per barrel
New York – DOW: DOWN 0.1 percent at 25,887.38 (close)
BSS/AFP/HR/1450