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ASIA-MARKETS-UPDATE
Asian markets down as trade fears linger
HONG KONG, July 4, 2018 (BSS/AFP) – Asian markets were down Wednesday as
trade tensions between the US and China continued to weigh on investor
sentiment ahead of the imposition of new tariffs.
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 is also under pressure, though it levelled 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.
The move fuelled “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 fell 1.0
percent, after a Tuesday sell-off that saw the market fall more than three
percent at one point.
The benchmark Shanghai Composite Index also closed down 1.0 percent, with
while Tokyo’s Nikkei was off 0.31 percent.
Tokyo traders were cautious about the trend in Chinese stocks but “with the
prospects that the yuan’s depreciation is bottoming out… buying back
supported the Japanese market later,” Okasan Online Securities strategist
Yoshihiro Ito said in a commentary.
Zhang Gang, analyst at Cental China Securities warned that investors remain
“worried that the US-China trade tensions could further escalate.”
“The market may not easily rebound before July 6th when things may become
clearer.”
Oil prices edged down slightly after earlier climbs on a tightening US
market along with potential US sanction actions against major producer Iran.
Saudi Arabia has said it is prepared to boost supply to balance the market,
but traders are also weighing factors ranging from a disruption to supply
from Libya to a fall in US crude inventories.
The prospect of Iranian oil being shut out of the market from November is
also causing volatility, 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 0.31 percent at 21,717.04 (close)
Shanghai – Composite: DOWN 1 percent at 2,759.13
Hong Kong – Hang Seng: DOWN 1 percent at 28,239.58
Euro/dollar: UP at $1.1671 from $1.1667
Pound/dollar: UP at $1.3219 from $1.3204
Dollar/yen: DOWN at 110.35 yen from 110.41 yen
Oil – West Texas Intermediate: DOWN 40 cents at $74.23 per barrel
Oil – Brent Crude: DOWN 17 cents at $78.00 per barrel
New York – Dow: UP 0.2 percent at 24,307.18 (close)
London – FTSE 100: DOWN 0.3 percent at 7,570.25
BSS/AFP/HR/1450