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Asian markets edge up as calm returns but fears remain
HONG KONG, June 21, 2018 (BSS/AFP) – Asian markets edged up tentatively
Thursday as a sense of stability returns after the turmoil earlier in the
week, though investors remain alert to any signs of another flare up in the
China-US trade spat.
Bargain buyers took advantage of the cheap valuations after Tuesday’s
blow-out that came in response to the world’s top two economies threatening
each other with tariffs on a mind-boggling amount of imports.
However, analysts warned the next plunge could come at any moment, while
central bankers voiced concerns about the impact a trade war could have on
the global economy.
US traders gave their Asian counterparts a mixed lead, with the Nasdaq
hitting a new record close thanks to a surge in tech giants, while the Dow
and S&P 500 finished in the red.
Tokyo ended the morning session 0.8 percent higher, with the yen weakening
as investors shifted out of the safe-haven unit.
Hong Kong edged up 0.3 percent and Shanghai rose 0.5 percent — the two
were the worst hit by Tuesday’s selling frenzy — and Sydney jumped more than
one percent while Seoul was marginally higher.
Wellington jumped more than one percent after data showed that while New
Zealand’s economy cooled in January-March, interest rates are not expected to
rise in the near term.
Stephen Innes, head of Asia-Pacific trading at OANDA, said markets were
“unsure if we’re in the calm after the storm, the lull between storms or even
in the eye of the hurricane”.
But he added: “There’s certainly a pattern forming that while equity
markets quiver during the trade dispute, stocks come roaring back with
(Facebook, Apple, Amazon, Netflix and Google) consistently leading the
charge.
“Despite the huge question mark over global trade, Wall Street quickly
returns focus to the US economy, which there is no denying is doing
exceptionally well.”
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– Central bank concerns –
Trump’s protectionist America First agenda has also seen him threaten
tariffs on steel and aluminium from the European Union and on Wednesday the
bloc outlined retaliatory measures against several US goods such as blue
jeans and motorcycles.
The upheaval has spooked the heads of the world’s central banks, who said
Wednesday they were seeing confidence already being hit, forcing them to
reconsider their forecasts for growth.
While the US economy is humming, Federal Reserve boss Jerome Powell warned
at a European Central Bank conference in Portugal: “Changes in trade policy
could cause us to have to question the outlook.
“For the first time, we’re hearing about decisions to postpone investment,
postpone hiring.”
His remarks were in line with those of his peers including from Japan and
Australia, while ECB head Mario Draghi said: “There have been lessons one can
learn from the past. They are all negative.”
On currency markets the pound continues to struggle as British Prime
Minister Theresa May pushed through key Brexit legislation but still faces
pressure to pick up the pace of talks with the EU ahead of a planned March
withdrawal.
Oil prices were mixed following a dip in US stockpiles and ahead of the
start Friday of a key OPEC meeting, where kingpin Saudi Arabia and non-member
Russia are pushing for an increase in output.
While a hike is expected some members of the cartel are against the move,
including Iran and Venezuela who complain the proposed hike is the result of
pressure from the United States.
“The market is still in search of some semblance of clarity,” Innes said,
but added: “While clarity brings power, I suspect it will also bring waves of
volatility as we’re indeed headed for some collision.”
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: UP 0.8 percent at 22,734.28 (break)
Hong Kong – Hang Seng: UP 0.3 percent at 29,789.98
Shanghai – Composite: UP 0.5 percent at 2,929.24
Euro/dollar: DOWN at $1.1567 from $1.1581 at 2100 GMT
Pound/dollar: DOWN at $1.3166 from $1.3183
Dollar/yen: UP at 110.55 yen from 110.37 yen
Oil – West Texas Intermediate: UP three cents at $65.74 per barrel (new
contract)
Oil – Brent Crude: DOWN 14 cents at $74.60 per barrel
New York – Dow Jones: DOWN 0.2 percent at 24,657.80 (close)
London – FTSE 100: UP 0.3 percent at 7,627.40 (close)
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