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Asian markets slide as trade and currency war fears deepen
HONG KONG, July 23, 2018 (BSS/AFP) – Asian markets largely lost ground
Monday as jitters grew over a potential trade and currency war, with the
dollar sliding against most major currencies and extending Friday’s declines.
The fall in the dollar came as US President Donald Trump attacked
Washington’s main trading partners for their currency policies on Friday.
“China, the European Union and others have been manipulating their
currencies and interest rates lower, while the U.S. is raising rates while
the dollars gets stronger and stronger with each passing day – taking away
our big competitive edge. As usual, not a level playing field,” Trump
tweeted.
Trump’s combative stance has compounded fears of an all-out trade and
currency war, with the US slapping tariffs on steel and aluminium from the
EU, Canada and Mexico, in addition to levies on goods from China worth tens
of billions of dollars.
In an interview with US channel CNBC broadcast Friday, Trump threatened to
impose taxes on all Chinese imports, saying the US has been “ripped off by
China for a long time”.
Tokyo plunged 1.3 percent — falling for a third straight trading day —
as a stronger yen hurt exporters, making their products less competitive
abroad and eroding repatriated profits.
Hong Kong ended the day flat while Seoul and Sydney slid 0.9 percent. But
Shanghai jumped more than one percent and Jakarta advanced 0.7 percent.
European markets opened lower, with London and Paris dropping 0.3 percent
and Frankfurt falling 0.4 percent.
Oil markets rose slightly, though analysts cautioned that concerns about
the trade dispute would likely weigh on prices in the short to medium term.
“The impact of the trade war and the recognition that President Trump and
his administration are serious about going to the mat on this issue is
finally starting to register in the consciousness of traders and investors in
oil and other financial markets”, said Greg McKenna, chief market strategist
at AxiTrader.
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“That means we are seeing downgrades, in some cases material, to the
outlook for global growth and as a consequence the demand for oil,” he added.
– ‘No winners’ –
Fears that the tensions would escalate into a full-blown trade war
dominated a meeting of Group of 20 finance ministers and central bankers at
the weekend in Buenos Aires.
The final communique from the group of leading economies stressed “the
need to step up dialogue and actions to mitigate risks and enhance
confidence” as worries have mounted.
EU finance chief Pierre Moscovici warned that “further trade escalation
conflicts would negatively affect” all the countries involved, the US
included. Protectionism benefits no one, and creates “no winners, only
casualties”.
International Monetary Fund chief Christine Lagarde agreed, and again
spoke out against the tit-for-tat tariffs and urged that “trade conflicts be
resolved via international cooperation without resort to exceptional
measures”.
The IMF warned recently that in a worst-case scenario, $430 billion of
global GDP — or a half percentage point — could be lost in 2020 if all
tariff threats and retaliations are carried out.
But US Treasury Secretary Steven Mnuchin defended Washington’s stance and
shrugged off the economic impact of the trade spat, saying so far the tariffs
have only affected the US on a “micro” scale, adding that from a “macro
standpoint we do not yet see any significant pattern on the economy”.
– Key figures at 0800 GMT –
Tokyo – Nikkei 225: DOWN 1.3 percent at 22,396.99 (close)
Hong Kong – Hang Seng: FLAT at 28,240.44 (close)
Shanghai – Composite: UP 1.1 percent at 2,859.54 (close)
London – FTSE 100: DOWN 0.3 percent at 7,655.09 (open)
Euro/dollar: UP at $1.1730 from $1.1723 at 2100 GMT
Pound/dollar: UP at $1.3149 from $1.3135
Dollar/yen: DOWN at 110.95 yen from 111.50 yen
Oil – Brent Crude: UP 11 cents at $73.18 per barrel
Oil – West Texas Intermediate: UP three cents at $68.29 per barrel
New York – Dow: DOWN less than 0.1 percent at 25,058.12 (close)
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