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Asian investors start week cautiously as China tariffs loom
NEW YORK, July 2, 2018 (BSS/AFP) – Asian investors kicked the week off
tentatively on Monday as they prepare for the US to impose hefty tariffs on a
range of Chinese imports, taking their trade row to another level.
The levies on billions of dollars of goods, which are due Friday, come
after data at the weekend showed Chinese manufacturing activity slowed in
June as the world’s number two economy shows signs of struggling.
Fears of a trade war have rattled world markets and particularly China’s,
which are now in bear territory having fallen 20 percent from their recent
highs.
“China’s economy will slow down for the rest of the year, but we don’t
need to worry about any stall yet,” Zhu Qibing, chief macroeconomy analyst at
BOC International China in Beijing, said. “The key is how international trade
and the dispute between China and the US will evolve.”
On Monday, Shanghai was 0.5 percent down in the morning session, while the
Chinese yuan also fell, extending a retreat that has led some observers to
suggest the country’s central bank is weakening the unit to offset the impact
of a trade war.
While China is a key target in Donald Trump’s protectionist America First
agenda, he has also set his sights on allies including the European Union and
Canada, which on Friday unveiled hefty tariffs on $12.6 billion of US goods
in retaliation for US measures on aluminium and steel.
Tokyo went in to the break 0.2 percent lower as a closely watched gauge of
Japanese business showed sentiment was softening.
– Merkel worries –
The Bank of Japan’s Tankan report — a quarterly survey of about 10,000
companies — showed a dip in confidence from the previous three months,
though economists pointed out that it is still around its highest level in
more than a decade.
In other markets Seoul dropped 0.5 percent and Manila was 0.1 percent off
but Sydney rose 0.3 percent, Singapore added 0.2 percent, Taipei gained 0.3
percent and Wellington was 0.1 percent higher.
Hong Kong was closed for a public holiday.
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On currency markets the euro dipped slightly but held most of Friday’s
gains following data showing inflation rising and news that European Union
leaders had reached a migration deal.
However there are worries about the future of German Chancellor Angela
Merkel’s coalition government after her conservative interior minister
offered to resign on Sunday over the issue.
Merkel had warned last week the issue of migration could decide the very
future of the EU itself.
The Mexican peso rose one percent against the dollar as anti-establishment
leftist Andres Manuel Lopez Obrador swept to the presidency, with his main
rivals conceding defeat and removing the risk of any dispute.
Oil prices retreated after Trump tweeted at the weekend that Saudi
Arabia’s King Salman had agreed to his request to open the taps wider.
The price drop comes after last week’s surge on the back of figures
indicating surging US demand and OPEC’s decision to hike output by a more
modest amount than initially thought.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 0.2 percent at 22,270.76 (break)
Shanghai – Composite: DOWN 0.5 percent at 2,832.54
Hong Kong – Hang Seng: Closed for a holiday
Euro/dollar: DOWN at $1.1657 from $1.1689 at 2100 GMT Friday
Pound/dollar: DOWN at $1.3190 from $1.3213
Dollar/yen: UP at 110.98 yen from 110.61 yen
Oil – West Texas Intermediate: DOWN 70 cents at $73.45 per barrel
Oil – Brent Crude: DOWN 72 cents at $78.51 per barrel (new contract)
New York – Dow: UP 0.2 percent at 24,271.41 (close)
London – FTSE 100: UP 0.3 percent at 7,636.93 (close)
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