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ASIA-MARKETS-UPDATE
Asian markets drop as traders await Powell speech
HONG KONG, Aug 21, 2019 (BSS/AFP) – Equities stuttered in Asia Wednesday
as investors took a step back after recent gains, with focus now turning to a
key speech by Federal Reserve boss Jerome Powell at the end of the week.
Rising hopes for China-US trade talks have provided a much-needed lift to
markets over the past two days but with few fresh catalysts, dealers are
keeping their powder dry ahead of Friday’s address.
After positive signals from Donald Trump and some of his top advisers on
Monday over progress in the talks with Beijing, and an olive branch with the
delay of a ban on Huawei purchases, there have been few developments for
traders to buy on.
“Our trade-war headline-inspired relief rally appears to have run its
course as I suspect there is still a lot of nervousness among US investors as
the global economic realities are just too hard to ignore,” said Stephen
Innes at Valour Markets.
Hong Kong added 0.2 percent, Shanghai was barely moved and Tokyo ended
down 0.3 percent. Sydney fell almost one percent, Singapore shed 0.3 percent
and Wellington was 0.9 percent lower.
Taipei finished flat and Seoul added 0.2 percent.
In early trade, London rose 0.5 percent, Paris added 0.8 percent and
Frankfurt was up 0.5 percent.
The Fed releases minutes of its July meeting later Wednesday which will
provide an insight into its deliberations when cutting interest rates for the
first time since the financial crisis.
But Powell’s talk at the central bankers’ gathering in Jackson Hole,
Wyoming, is the key event and will be closely pored over for clues about the
bank’s plans for next month, with experts unable to agree on whether or not
he will announce further cuts.
There has been increased speculation that central banks and governments
will step in with stimulus support to head off a global downturn, but
analysts warn they could be disappointed by what Powell has to say regarding
Fed action.
MORE/HR/1448
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– ‘Very far from recession’ –
Wall Street and Trump “are anticipating that Mr Powell will signal that
the Federal Reserve is about to embark on a reinvigorated wave of easing,
following its global peers”, said Jeffrey Halley, OANDA senior market analyst
for Asia-Pacific.
“The US data of late simply does not support the need for an aggressive
easing cycle. Despite the US-China trade tensions making their presence felt
in European and Asian data prints, this has simply not happened with the
United States to any significant degree.”
Also, Trump on Tuesday insisted the economy was doing well, denying
warnings from some quarters — including top economists — that the US was
heading for a recession within two years.
“I think the word recession is inappropriate,” he told reporters at the
White House. “We’re very far from recession.”
On currency markets, the euro was struggling against the dollar as a
political crisis in Italy — the eurozone’s number three economy — offset
hopes that Germany’s government would unveil measures to avert a downturn.
Italian Prime Minister Giuseppe Conte resigned and hit out at far-right
Interior Minister Matteo Salvini for pursuing his own interests by bringing
an end to the government coalition.
President Sergio Mattarella must now decide to form a new coalition or
call an election, throwing up more uncertainty and another possible budget
standoff with the European Union.
However, the single currency and the dollar were well up against the pound
as Britain’s exit from the EU without a divorce deal grows increasingly
likely.
Oil prices extended gains as data showing a drop in US stockpiles
indicated improving demand for the commodity. Both main contracts have risen
about five percent over the past week, with support also coming from trade
talks hopes.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 20,618.57 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 26,270.04 (close)
Shanghai – Composite: FLAT at 2,880.33 (close)
London – FTSE 100: UP 0.5 percent at 7,159.33
Euro/dollar: DOWN at $1.1095 from $1.1097 at 2040 GMT
Pound/dollar: DOWN at $1.2136 from $1.2166
Euro/pound: UP at 91.42 pence from 91.20 pence
Dollar/yen: UP at 106.50 yen from 106.23 yen
West Texas Intermediate: UP 15 cents at $56.28 per barrel (new contract)
Brent North Sea crude: UP 34 cents at $60.37 per barrel
New York – Dow: DOWN 0.7 percent at 25,962.44 (close)
BSS/AFP/HR/1450