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Asian markets mixed but trade war fears fester
HONG KONG, July 3, 2018 (BSS/AFP) – Asian markets were mixed Tuesday, but
while they were up from earlier lows, investors continued to fret over
looming US-China tariffs that bring a potential trade war a step closer.
Wall Street provided a positive lead but the day began with another selling
frenzy that saw Hong Kong plunge more than three percent at one point before
bargain-buying provided a small bounce.
Still there are particular fears for Shanghai, which has plunged more than
20 percent from its January high as the colossal Chinese economy shows signs
of slowing, even before Donald Trump’s threatened tariffs kick in Friday.
The yuan extended losses and has fallen around eight percent since the end
of March — it is now at an 11-month low — adding to fears about the
mainland as leaders struggle to cap a debt mountain while also supporting
growth.
Analysts dismissed some claims that authorities are allowing the Chinese
currency to weaken in order to offset the impact of any tariffs.
“We have already seen the impact on Chinese investors’ anxiety over a
weaker currency and subsequent capital outflow in 2015-16,” said Tai Hui, JP
Morgan Asset Management chief market strategist for Asia-Pacific.
“This is not a can of worms that Beijing wants to open again.”
People’s Bank of China Governor Yi Gang looked to provide some optimism,
telling the China Securities Journal authorities were keeping an eye on the
situation.
“We will continue to implement a prudent and neutral monetary policy… and
keep the yuan exchange rate basically stable at a reasonable and balanced
level,” he said.
The US Commerce Department on Monday added to the standoff by recommending
against the approval of China Mobile’s seven-year-old application to enter
the US market, citing national security concerns.
The call comes as US lawmakers debate reimposing a ban on US firms selling
to Chinese telecoms equipment maker ZTE over security considerations, putting
its survival in peril.
MORE/MR/ 1450 hrs
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In share trading Hong Kong sank more than three percent at one point as
traders returned from a long weekend break to play catch up with the rest of
Asia’s retreat on Monday.
The Hang Seng then edged back to end 1.4 percent lower. China Mobile’s
shares were down two percent.
– Crude edges back –
Shanghai rose 0.4 percent and Singapore lost 0.2 percent, while Tokyo ended
0.1 percent lower.
Sydney added 0.5 percent, Seoul rose 0.1 percent and Wellington jumped more
than one percent. Taipei and Jakarta fell but Manila and Bangkok rose.
In early European trade London rose 0.5 percent, Paris added 0.4 percent
and Frankfurt gained 0.7 percent.
While the focus this week is mainly on the hundreds of billions worth of
goods targeted by US-China tariffs, Trump has also taken aim at the European
Union and Canada, which have both announced retaliatory measures, adding to
global trade war warnings.
Oil prices edged up in Asia after taking a hit on Monday from a tweet by
Trump at the weekend saying Saudi Arabia had agreed to his request to ramp up
output.
Despite the possible increase in output, analysts said they saw prices
continuing to rise.
“The market remains supported by a production outage in Libya and the
overhang from recent US… data which suggest US supplies are running very
tight,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
The euro held up against the dollar after German Chancellor Angela Merkel
reached a compromise deal on immigration with her coalition partners, keeping
her government intact for now and averting a crisis in Europe’s biggest
economy.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.1 percent at 21,785.54 (close)
Hong Kong – Hang Seng: DOWN 1.4 percent at 28,545.57 (close)
Shanghai – Composite: UP 0.4 percent at 2,786.89 (close)
London – FTSE 100: UP 0.5 percent at 7,581.71
Euro/dollar: UP at $1.1663 from $1.1642 at 2100 GMT
Pound/dollar: UP at $1.3173 from $1.3143
Dollar/yen: UP at 111.01 yen from 110.86 yen
Oil – West Texas Intermediate: UP 75 cents at $74.69 per barrel
Oil – Brent Crude: UP 60 cents at $77.90 per barrel
New York – Dow: UP 0.2 percent at 24,307.18 (close.
BSS/AFP/MR/ 1450 hrs