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Asia stocks fall on trade war fears
HONG KONG, July 19, 2018 (BSS/AFP) – Asian markets mostly fell Thursday,
as the US Federal Reserve chief’s upbeat assessment of the economy failed to
allay concerns about a global trade war.
In his second day of congressional testimony on Wednesday, Federal Reserve
Chairman Jerome Powell expressed optimism over the US economy.
But he warned that the spiralling global trade row was having a negative
impact on companies in the US.
“We hear from our extensive network of business contacts a rising chorus
of concerns,” he said.
US President Donald Trump has imposed steep tariffs on products from China
worth tens of billions of dollars, and has threatened to target hundreds of
billions more, on top of import taxes on steel and aluminium that have
angered allies such as the EU.
“Powell was pretty straightforward on the risks from the trade policy
uncertainty though he tried to stay out of the political debate,” said Greg
McKenna, chief market strategist at AxiTrader.
The Fed chief said US businesses were already being hurt by reciprocal
tariffs on key products, pointing out: “The bottom line is a more
protectionist economy is less competitive, less productive.”
However, he also said that if Trump’s trade policy resulted in lower
tariffs, that would be good for the US economy.
Hong Kong closed down 0.4 percent while Shanghai was 0.5 percent lower.
Seoul fell 0.3 percent and Tokyo edged down 0.1 percent, snapping a four-day
winning streak.
“Profit-taking emerged after four days of gains,” said Hikaru Sato, senior
technical analyst at Daiwa Securities.
“But the decline was limited due to a weak yen and gains in US shares,”
Sato told AFP.
Sydney gained 0.3 percent while Singapore rose one percent.
In a sign of worsening tensions over the trade dispute, a senior economic
adviser to Trump attacked Chinese President Xi Jinping for blocking an
agreement to resolve the issue.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
“I think Xi is holding the game up,” said Larry Kudlow, director of the
White House National Economic Council. “I don’t think President Xi has any
intention of following through on the discussions we’ve made.”
– Oil reverses early gains –
European markets were steady at the start of trading, with Frankfurt flat
while London and Paris inched down 0.2 percent.
Oil reversed minor gains made earlier on the back of data from the US
Department of Energy which showed a fall in distillate stockpiles, including
gasoline.
“The gasoline numbers were marginally optimistic enough to raise supply
concerns”, said Stephen Innes, head of Asia-Pacific trading at Oanda trading
group.
But investor fears that the US could tap its Strategic Petroleum Reserve
in a bid to push down gasoline prices saw both main oil contracts fall.
Major producers led by OPEC kingpin Saudi Arabia have lifted a cap on
production, which previously propped up crude prices following a global
supply glut.
This has seen the commodity plunge to new lows this week.
– Key figures at 0820 GMT –
Tokyo – Nikkei 225: DOWN 0.1 percent at 22,764.68 (close)
Hong Kong – Hang Seng: DOWN 0.4 percent at 28,010.86 (close)
Shanghai – Composite: DOWN 0.5 percent at 2,772.55 (close)
London – FTSE 100: DOWN 0.2 percent at 7,665.14 (open)
Dollar/yen: UP at 112.91 yen from 112.86 yen at 2030 GMT
Euro/dollar: DOWN at $1.1608 from $1.1639
Pound/dollar: DOWN at $1.3027 from $1.3069
Oil – Brent Crude: DOWN 37 cents at $72.53 per barrel
Oil – West Texas Intermediate: DOWN 26 cents at $68.50 per barrel
New York – Dow: UP 0.3 percent at 25,199.29 (close)
BSS/AFP/HR/1445