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Asian markets fluctuate as US tariffs spark fresh trade war fears
HONG KONG, June 1, 2018 (BSS/AFP) – Asian investors shifted uneasily on
Friday as fears of a trade war blasted back to the fore after Donald Trump
imposed stiff tariffs on European, Mexican and Canadian steel and aluminium.
The move sparked immediate countermeasures by Mexico and Canada, while the
European Union threatened a similar response, throwing up the prospect of a
painful conflict between some of the world’s biggest economies.
French President Emmanuel Macron labelled the move “illegal”.
It also overshadowed news that Italy’s populist parties had reached a deal
to revive a coalition government and avoid a snap election that many had
feared could be used as a referendum on the country’s euro membership.
However, while some say the measures — which followed US warnings that
tariffs on some Chinese goods were still up in the air — are a White House
ploy to gain the upper hand in ongoing talks, others warn the issue could
blow up.
“While markets overreacted to the Italian mess a couple of days back, it
strikes me they might be under-reacting to the real — distractive —
negatives of this trade skirmish developing into a trade war,” said Greg
McKenna, chief market strategist at AxiTrader.
“My guess is that many traders and investors see this as another
negotiating tactic from the Trump Administration,” he said.
“But we are now genuinely faced with the type of tit-for-tat trade spat,
of which there will be few winners and which could materially impact global
growth and relations.”
– Eyes on jobs and G7 –
McKenna also warned Trump was at risk of being overwhelmed as he fights
several battles at once, with North Korea, Iran, trade and the Russia
investigation at home among the major issues in his inbox.
Hong Kong edged up 0.1 percent and Tokyo ended the morning 0.3 percent
higher while Seoul gained 0.7 percent.
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But Shanghai fell 0.2 percent with no early boost to companies listed on
MSCI’s emerging market index for the first time.
Inclusion means for the first time major investors wanting to track the
index will have to buy stocks in the more than 200 mainland firms, though
their weighting for now is miniscule, making up just 0.4 percent of it.
Sydney dropped 0.3 percent, Singapore was 0.1 percent off and Wellington
dropped 0.2 percent.
Investors are now looking ahead to the release Friday of US jobs data,
hoping for an idea about Federal Reserve interest rate policy.
Also, a Group of Seven finance ministers meeting is due to take place at
the weekend, with analysts looking for a possible fracture as Trump embarks
on a unilateral “America First” agenda.
On currency markets the euro was holding its ground, having surged from
10-month lows on the news from Rome, which brought some much-needed relief
after days of uncertainty.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: UP 0.3 percent at 22,273.50 (break)
Hong Kong – Hang Seng: UP 0.1 percent at 30,493.36
Shanghai – Composite: DOWN 0.2 percent at 3,088.29
Euro/dollar: DOWN at $1.1691 from $1.1695 at 2100 GMT
Pound/dollar: DOWN at $1.3290 from $1.3293
Dollar/yen: UP at 108.92 yen from 108.81 yen
Oil – West Texas Intermediate: DOWN six cents at $66.98 per barrel
Oil – Brent Crude: UP six cents at $77.62 per barrel (new contract)
New York – Dow Jones: DOWN 1.0 percent at 24,415.84 (close)
London – FTSE 100: DOWN 0.2 percent at 7,678.20 (close)
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