BCN-42 Asian stocks slip despite US, EU plan to ease trade tensions

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BCN-42

ASIA-MARKETS-UPDATE

Asian stocks slip despite US, EU plan to ease trade tensions

SINGAPORE, July 26, 2018 (BSS/AFP) – Asian stocks mostly fell Thursday
as investor relief at US President Donald Trump and the European Commission
chief’s plan to ease trade tensions was offset by disappointing Wall Street
earnings.

Trump and Jean-Claude Juncker announced the agreement after talks
Wednesday at the White House, as the two major economies sought to end the
dispute that had rattled markets and sparked fears of an all-out global trade
war.

The plan means Washington will not follow through with a threat to impose
tariffs on autos, which would hurt the dominant German car industry, while
the pair also vowed to look at existing duties on steel and aluminium imposed
by the US that had angered the EU.

Asian bourses initially made gains at the open Thursday, tracking
overnight advances in the US. But most exchanges quickly fell back into
negative territory with analysts blaming the lacklustre US results, from
companies including social networking giant Facebook and major carmakers.

The EU-US deal had given American equities a “late boost”, said Jingyi
Pan, market strategist at trading group IG.

But she added that “the blips in the latest US earnings performances look
to undercut some of these positive inspirations for the Asian region”.

Tokyo closed down 0.1 percent, with speculation that the Bank of Japan
could review its buying of exchange-traded funds to invest in listed
companies at a meeting next week adding to negative sentiment.

Shanghai ended 0.7 percent lower, Sydney closed flat while Hong Kong was
down 0.5 percent.

Seoul bucked the negative trend, rising 0.7 percent, as investors cheered
official data showing that economic growth in the second quarter met
expectations.

In Europe, markets advanced in opening trade on investor relief at the US-
EU plan. London’s benchmark FTSE 100 index added 0.2 percent while in the
eurozone, Frankfurt’s DAX 30 jumped 1.2 percent, with carmakers accelerating
on the back of the plan.

– Facebook plunge –

The biggest shock of Wednesday’s results came from Facebook, which
reported a stunningly weak financial outlook that raised fresh concerns for
the company giant as it tries to recover from the impact of data protection
scandals and investigations.

After-hours trade saw Facebook shares plunge by some 21 percent, wiping
out an estimated $130 billion in market value if the slump is confirmed at
Thursday’s market opening.

Ford reported a sharp drop in second-quarter earnings while General Motors
reported a jump in second-quarter profit, but cut its full-year profit
forecast. Fiat Chrysler also reported disappointing results.

In currency markets, the euro slipped back slightly in afternoon trade
after making some gains after the EU-US trade announcement, while the dollar
held steady throughout the day after overnight falls.

Traders were also awaiting a meeting of the European Central Bank later
Thursday, although analysts expect the bank to leave unchanged its plans to
end massive stimulus for the eurozone by December.

Oil prices marched higher after Saudi Arabia halted crude shipments
through a key waterway due to an attack on shipping by Iran-backed Yemeni
rebels and a huge decline in US crude inventories.

– Key figures at 0800 GMT –

Tokyo – Nikkei 225: DOWN 0.1 percent at 22,586.87 (close)

Hong Kong – Hang Seng: DOWN 0.5 percent at 28,781.14 (close)

Shanghai – Composite: DOWN 0.7 percent at 2,882.23 (close)

London – FTSE 100: UP 0.2 percent at 7,676.67

Euro/dollar: STEADY at $1.1729 from $1.1729

Pound/dollar: DOWN at $1.3191 from $1.3193

Dollar/yen: DOWN at 110.70 yen from 110.98 yen

Oil – Brent Crude: UP 77 cents at $74.70 a barrel

Oil – West Texas Intermediate: UP 20 cents at $69.50 a barrel

New York – Dow: UP 0.7 percent at 25,414.10 (close)

BSS/AFP/HR/1430