ZCZC
BCN-27
ASIA-MARKETS-UPDATE
Most Asian markets up but traders on edge as tariffs are hiked
HONG KONG, May 10, 2019 (BSS/AFP) – Shanghai led gains across most Asian
and European markets Friday at the end of a torrid week for equities, with
investors keeping a nervous eye on China-US trade talks after Washington more
than doubled tariffs on $200 billion of imports.
Equities started the day on a high as dealers took heart from positive
comments from Donald Trump on the prospects for a deal but the region turned
negative as the threatened levies kicked in and China vowed to hit back,
saying it “deeply” regretted the US move.
However, Shanghai and Hong Kong bounced back on hopes the economic
superpowers will be able to reach a deal to avert a trade war that most
observers warn could shatter global growth and batter markets.
The tariffs came in after the first day of high-stakes negotiations in
Washington between Chinese Vice Premier Liu He, US Trade Representative
Robert Lighthizer and Treasury Secretary Steven Mnuchin.
After a week in which trading floors have been a sea of red, regional
equities were given a lift by Trump saying he had received a “beautiful
letter” from China’s Xi Jinping and that it was “possible” to get a deal.
Shanghai, which lost more than seven percent from Monday to Thursday,
ended up 3.1 percent, while Hong Kong piled on one percent in the afternoon.
Sydney and Singapore each added 0.3 percent, while Seoul was up a similar
amount as investors brushed off news that North Korea had tested a long-range
weapon, which is likely to raise tensions after the breakdown of
denuclearisation talks with the United States. Mumbai added 0.2 percent.
But Tokyo finished down 0.3 percent, while Wellington, Manila, Taipei,
Jakarta and Bangkok also fell.
In early trade London rose 0.6 percent, Paris gained 0.9 percent and
Frankfurt advanced more than one percent.
– ‘The peace is fragile’ –
“Given the deadline has now passed there is the possibility that tariffs
could still be avoided given that US officials allowed for goods currently in
transit to be exempt from the new tariff increases,” said Michael Hewson,
chief market analyst at CMC Markets UK.
MORE/HR/1430
ZCZC
BCN-28
ASIA-MARKETS-UPDATE 2 LAST HONG KONG
“Which means there is a potential window, albeit a limited one, for an
agreement to be hammered out.”
But a lot of uncertainty remains.
“Markets will be in a holding pattern as we await the outcome of the
meeting,” said Khoon Goh, head of Asia research at ANZ Bank. “If there is a
breakdown and the tariffs go up, then we will see a risk-off tone in
markets.”
OANDA senior market analyst Jeffrey Halley said the fact that tariffs were
to rise midway through the talks gave “precious little time to come up with
something that satisfies both sides”.
Although markets are up, “the peace is fragile, and it won’t take much
today to panic investors into heading for the exit door en masse,” he added.
Halley also warned that while Trump praised Xi’s letter it was hard “to
see how either of these two presidents will ever manage to really share the
toys and play nicely on the global stage”.
In worrying sign, Hu Xijin, editor-in-chief of the Global Times — which
is published by the Communist Party’s People’s Daily — cited a source
familiar with the talks as saying there is “zero” chance of a deal before
Friday.
“If it is that bad, the real suspense is whether the two sides will
continue negotiations after Friday,” Hu said.
The slightly improved sentiment, and bargain-buying, provided support to
higher-yielding, riskier currencies — though the yuan continues to wallow
around four-month lows.
On oil markets both main contracts edged up, though Halley warned that
failure of the trade talks “would be the straw that breaks the camel’s back”
and send the commodity tumbling, despite US-Iran tensions and Venezuela’s
political crisis.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 21,344.92 (close)
Hong Kong – Hang Seng: UP 1.1 percent at 28,602.70
Shanghai – Composite: UP 3.1 percent at 2,939.21 (close)
London – FTSE 100: UP 0.6 percent at 7,251.28
Euro/dollar: UP at $1.1220 from $1.1218 at 2050 GMT
Pound/dollar: UP at $1.2999 from $1.3011
Dollar/yen: UP at 109.81 yen from 109.71 yen
Oil – West Texas Intermediate: UP 39 cents at $62.09 per barrel
Oil – Brent Crude: UP 34 cents at $70.73 per barrel
New York – Dow: DOWN 0.5 percent at 25,828.36 (close)
BSS/AFP/HR/1432