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Asian markets fall as trade war fears weigh on sentiment
HONG KONG, June 25, 2018 (BSS/AFP) – Asian markets fell Monday as fears of
a global trade war continue to dog investors, with Donald Trump threatening
fresh tariffs on European cars and reports he is considering curbs on Chinese
investment in the US.
There was little sign of relief after equities suffered a pummelling last
week in response to tit-for-tat warnings by Beijing and Washington, which has
fuelled concerns about the potential damage to the world economy.
The uncertainty overshadowed a modest increase in oil output agreed by
OPEC and Russia — which sent energy firms surging with crude prices — and
Chinese easing measures.
Tokyo ended 0.8 percent lower, while Hong Kong and Shanghai were both off
more than one percent. Sydney lost 0.2 percent and Singapore shed 0.8
percent.
Taipei was one percent lower, while Seoul and Wellington were barely
moved.
In early European trade London fell 0.7 percent, while Paris and Frankfurt
each shed 0.6 percent.
Concerns the tariff spat could turn into a full-blown trade war were
stoked Monday following reports that the Treasury Department is looking at an
emergency law beefing up scrutiny of investment by Chinese firms in sensitive
US industries.
Treasury Secretary Steven Mnuchin is expected to push the plan this week,
Bloomberg News reported.
“This one could well result in an escalating trade war,” Lee Ferridge, a
macro strategist at State Street Corp., told Bloomberg TV. “Volatility is
going to continue to rise from here.”
– China easing –
While some observers are saying Trump’s moves are part of a negotiating
tactic, he has shown no sign of backing down and on Friday threatened to
impose a 20 percent tariff on cars imported from the European Union. That
came just after the bloc imposed levies on US products, including bourbon,
jeans and motorcycles.
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Still, late Sunday he tweeted: “The United States is insisting that all
countries that have placed artificial Trade Barriers and Tariffs on goods
going into their country, remove those Barriers & Tariffs or be met with more
than Reciprocity by the U.S.A. Trade must be fair and no longer a one way
street!”
The People’s Bank of China on Sunday said it would lower the amount of
cash lenders must keep in reserve as it looks to soothe investors worried
about a trade conflagration.
The cut — which will free up more than $100 billion for banks — is set
to come into effect on July 5, the day before new US tariffs are due to be
imposed on Chinese imports worth $34 billion.
While broad markets are taking another hit, energy firms in Asia were
outperforming after OPEC agreed to increase oil production by around a
million barrels a day from July.
But officials admitted actual output would likely be much lower as some
countries struggle to lift production.
Brent jumped more than three percent on Friday while WTI climbed more than
four percent, though both contracts dipped Monday on concerns about the
impact a trade war would have on demand.
On currency markets the Turkish lira, which had lost some 20 percent in
value against the dollar this year, surged about three percent after
President Recep Tayyip Erdogan scored a decisive election victory, soothing
worries of a prolonged period of political uncertainty.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: DOWN 0.8 percent at 22,338.15 (close)
Hong Kong – Hang Seng: DOWN 1.1 percent at 29,020.54
Shanghai – Composite: DOWN 1.1 percent at 2,859.34 (close)
London – FTSE 100: DOWN 0.7 percent at 7,626.54
Euro/dollar: DOWN at $1.1643 from $1.1658 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.3253 from $1.3260
Dollar/yen: DOWN at 109.48 yen from 109.98 yen
Oil – West Texas Intermediate: DOWN 17 cents at $68.41 per barrel
Oil – Brent Crude: DOWN $1.31 at $74.24 per barrel
New York – Dow Jones: UP 0.5 percent at 24,580.89 (close)
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