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WORLD-MARKETS-UPDATE
Asian markets eke out gains amid trade war fears
HONG KONG, July 25, 2018 (BSS/AFP) – Asian stocks made modest gains
Wednesday, after a batch of generally solid US earnings and news of China’s
stimulus plans helped drive markets up.
Beijing on Tuesday signalled that it would shift to a looser fiscal policy
in a bid to protect the world’s second largest economy from the impact of an
escalating trade row with Washington.
The announcement sent Shanghai’s main stock index up 1.6 percent on
Tuesday, while the yuan hit a 13-month low versus the US dollar.
Shanghai’s rally stalled Wednesday, with the market edging down 0.1
percent. But Hong Kong and Singapore jumped one percent while Tokyo rose 0.5
percent.
European markets stabilised in opening trade on Wednesday, with Paris
adding 0.2 percent and London down 0.1 percent while Frankfurt was flat.
The mixed movements in markets came as analysts warned that investors were
still weighing the implications of the spat between Washington and its main
trading partners including China and the European Union.
In addition to slapping hefty import taxes on steel and aluminium from the
EU, Canada and Mexico, Trump has imposed 25 percent tariffs on $34 billion of
Chinese products, drawing a retaliatory response from Beijing.
Washington has since threatened tariffs on another $200 billion of Chinese
goods.
– ‘Not optimistic’ –
“While investors remain upbeat about earnings and the US economy, it’s
increasingly challenging to stay optimistic given all the negative
geopolitical news flows all the while staring at the possibility of US
follow-through with another 200 billion (in) tariffs late August,” said
Stephen Innes, head of Asia-Pacific trading at Oanda trading group.
“The price of US soybeans, meanwhile, has dropped roughly 20 per cent
since Trump announced his first round of tariffs in March,” Innes added.
In what appeared to be the first acknowledgement that Trump’s aggressive
trade strategy was hurting ordinary Americans, the US government on Tuesday
announced $12 billion in aid for farmers who have been the primary targets of
retaliatory measures.
MORE/MR/ 1414 hrs
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But the US leader showed no sign of backing down on his approach,
tweeting: “Tariffs are the greatest!”
European Commission President Jean-Claude Juncker, who was on his way to
Washington on Wednesday to meet Trump in a bid to prevent an escalation of
tariffs, said he was “not very optimistic” about the outcome.
“I know Mr Trump pretty well. I have met him frequently and know how to
deal with him and know how he deals with others. We will negotiate as
equals,” Juncker told German public broadcaster ZDF.
Oil prices rose in Asian trade Wednesday following a report by the
industry group American Petroleum Institute (API) showing a decline in US
crude inventories.
“Crude oil prices scaled the charts as markets reacted to a US inventory
drawdown in API reports,” said Bemjamin Lu, a Singapore-based commodities
analyst with Phillip Futures.
He cautioned however that “though oil prices have recuperated in the
coming term, bearish signals continue to permeate chart activities as the
threat of rising supplies looms large”.
– Key figures at 0700 GMT –
Tokyo – Nikkei 225: UP 0.5 percent at 22,614.25 (close)
Hong Kong – Hang Seng: UP one percent at 28,956.58 Shanghai – Composite:
DOWN 0.1 percent at 2,903.65 (close)
London – FTSE 100: DOWN 0.1 percent at 7,702.66
Euro/dollar: UP at $1.1697 at $1.1682 at 2100 GMT
Pound/dollar: UP at $1.3169 from $1.3144
Dollar/yen: DOWN at 111.17 yen from 111.20 yen
Oil – Brent Crude: UP 69 cents at $74.13 per barrel
Oil – West Texas Intermediate: UP 32 cents at $68.84 per barrel
New York – Dow: UP 0.7 percent at 25,241.94 (close).
BSS/AFP/MR/ 1414 hrs