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Asian markets down as trade fears linger
HONG KONG, July 4, 2018 (BSS/AFP) – Asian markets were down Wednesday,
though Hong Kong recovered slightly from an earlier tumble, as trade tensions
between the US and China continued to weigh on investor sentiment.
Wall Street ended the session down in a shortened trading day ahead of
Wednesday’s Independence Day holiday, with falls in tech stocks pressuring
the market.
Concerns remain for Shanghai, which is down more than 20 percent from its
January high on concerns about a slowing economy, even before new US tariffs
threatened by Donald Trump kick in Friday.
China’s yuan however stabilised after a rally on comments from central
bank chief Yi Gang, who pledged to keep the exchange rate stable and avoid
using the currency as a weapon in any trade war.
The unit has fallen around eight percent since the end of March, adding to
fears about the economy as leaders struggle to cap massive debt while
supporting growth.
Despite the central bank’s reassurances, “the markets remain very bearish
on China… well over and above trade tensions, as waning growth momentum has
contributed to diverging economic indicators versus the US,” said Stephen
Innes, head of Asia-Pacific trade at OANDA.
“Unless there’s compromise in the trade dispute, the yuan should remain
under pressure,” he added.
But there is little sign of an easing in the standoff between Beijing and
Washington, with a Chinese court decision to temporarily ban chip sales by US
tech company Micron Technology further souring the atmosphere.
While the case was primarily a dispute between Micron and a Taiwanese
firm, the ruling comes after the US blocked China Mobile from the US market,
“fuelling speculation the decisions were part of the tit-for-tat trade war,”
wrote David de Garis, director of economics and markets at National Australia
Bank.
In share trading, Hong Kong was flat at the open, and later edged down 0.2
percent, after a Tuesday sell-off that saw the market fall more than three
percent at one point.
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The benchmark Shanghai Composite Index was off 0.7 percent, while Tokyo’s
Nikkei was down 0.7 percent by the break.
Sydney fell 0.5 percent, while Seoul was virtually flat, down just 0.05
percent.
Oil prices edged up despite Saudi Arabia saying it was prepared to boost
supply to balance the market, essentially confirming that it had been asked
by Trump to increase production.
A disruption to supply from Libya was also pressuring prices, analysts
said.
“Despite suggestions of more supplies coming to market, traders continue
to buy dips as increased barrels may only act to prevent a more rapid
increase in prices, given the global economy’s insatiable demand for oil,”
wrote Innes.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 0.7 percent at 21,623.94 (break)
Shanghai – Composite: DOWN 0.2 percent at 2,772.43
Hong Kong – Hang Seng: DOWN 0.7 percent at 28,327.46
Euro/dollar: UP at $1.1667 from $1.1633
Pound/dollar: UP at $1.3204 from $1.3132
Dollar/yen: DOWN at 110.41 yen from 111.07 yen
Oil – West Texas Intermediate: UP 49 cents at $74.63 per barrel
Oil – Brent Crude: UP 41 cents at $78.17 per barrel
New York – Dow: UP 0.2 percent at 24,307.18 (close)
London – FTSE 100: DOWN 1.2 percent at 7,547.85 (close)
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