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Asian markets mostly up but trade war fears resurface
HONG KONG, April 10, 2019 (BSS/AFP) – Asian markets mostly reversed early
losses Wednesday but investors remain nervous as the possibility of a US-EU
trade war shifted into focus after Washington’s tariffs threat, while they
were also spooked by Brexit uncertainty.
The warning from US President Donald Trump’s administration that it would
impose levies on more than $11 billion of European imports jolted investors,
who had been enjoying a positive run of late thanks to optimism over China-US
trade talks.
The development — linked to EU subsidies for planemaker Airbus that Trump
says hurt US giant Boeing — stoked concerns about the White House’s hardline
protectionist agenda that has taken aim at its biggest trading partners since
the tycoon’s election.
It also comes despite negotiators holding a series of meetings since last
year ahead of proposed trade talks to resolve the dispute.
“The primary market issues are that this could unwind much of the
positivity around a comprehensive trade resolution as the US trade hawks
continue to apply pressure on longtime allies,” said Stephen Innes at SPI
Asset Management.
“Friend or foe, the latest headline suggests no country is exempt from the
wrath of President Trump’s trade agenda.”
The move could dent a rally that has seen markets across the globe enjoy a
blockbuster start to the year with most up at multi-month highs.
All three main Wall Street indexes ended lower Tuesday and while the
losses seeped through to Asia in the morning the region’s markets picked up
as the day wore on.
Hong Kong dipped 0.1 percent and Tokyo ended off 0.5 percent, while there
were also losses in Wellington and Jakarta.
However, Shanghai ended up 0.1 percent, Seoul rose 0.5 percent and
Singapore gained 0.1 percent with Sydney, Taipei, Manila and Bangkok also in
the ascendance.
In early trade London rose 0.1 percent, while Frankfurt added 0.4 percent
and Paris gained 0.3 percent.
MORE/HR/1445
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– ‘Poison the well’ –
Upheaval in world trade was among the major reasons the International
Monetary Fund trimmed its 2019 global growth forecast, with Brexit adding to
its worries.
Prime Minister Theresa May will on Wednesday hear at a showdown summit the
EU’s decision on her request for an extension to Britain’s exit, which is due
Friday, and to avoid an economically calamitous no-deal divorce.
While she has asked for a delay until the end of June, EU heads fear that
will not be enough and Council President Donald Tusk has suggested up to a
year to find a new way around the crisis.
Observers broadly expect a deal to eventually be made, though US Treasury
Secretary Steven Mnuchin said a “hard Brexit” remained possible, adding that
authorities were preparing for such an eventuality.
The pound continued to hold its own, rising on the prospect of a delay to
Brexit.
However, Michael Hewson, chief market analyst at CMC Markets UK, warned an
extension “will inevitably mean that the UK will have to take part in
European elections, which is unlikely to be well received by a lot of people,
and could well poison the well of UK politics even more than it already is”.
Oil prices edged up as Russian President Vladimir Putin left open the
possibility of extending a production cut agreed with OPEC.
“We’ll coordinate with OPEC and take a decision depending on the market
situation” when the producers meet in June, he said.
The commodity has enjoyed a bumper 2019 thanks to US-China optimism,
sanctions on Iran and Venezuela, a weaker dollar and the recent unrest in
Libya.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.5 percent at 21,687.57 (close)
Hong Kong – Hang Seng: DOWN 0.1 percent at 30,119.56 (close)
Shanghai – Composite: UP 0.1 percent at 3,241.93 (close)
London – FTSE 100: UP 0.1 percent at 7,430.46
Pound/dollar: UP at $1.3063 from $1.3056 at 2045 GMT
Euro/pound: DOWN at 86.23 pence from 86.26 pence
Euro/dollar: DOWN at $1.1262 from $1.1264
Dollar/yen: UP at 111.20 yen from 111.15 yen
Oil – West Texas Intermediate: UP 31 cents at $64.29 per barrel
Oil – Brent Crude: UP 22 cents at $70.83 per barrel
New York – Dow: DOWN 0.7 percent at 26,150.58 (close)
BSS/AFP/HR/1450