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Asian traders on course to end painful week with losses
NEW YORK, June 22, 2018 (BSS/AFP) – Asian investors were on course to end a
tumultuous week with more losses on Friday as the prospect of a debilitating
global trade war hung over regional markets.
As European Union tariffs on key US goods — including jeans, bourbon and
motorcycles — came into effect, there were fears China and the US will carry
through with their own threats, locking the world’s three biggest economies
in a potentially destructive face-off.
The EU move was in retaliation to Donald Trump’s decision to hit steel and
aluminium imports from the bloc, and comes after the US and China traded tit-
for-tat threats on hundreds of billions of dollars of goods.
There are worries a full-blown flare up could pummel the global economy
just as it is getting back on its feet after the global financial crisis.
“We have a trade war — and it’s an escalating trade war,” SEB chief
economist Robert Bergqvist told AFP in an interview.
“Investors… are more cautious today, they are waiting for the right time
to reduce their exposure in stock markets.”
New York’s three main indexes ended down — with the Dow suffering an
eighth straight loss — as investors were spooked by news that Daimler had
cut its profit forecasts because of new levies on cars exported from the US
to China.
“We heard from Daimler about the impact of the trade tensions on sales, and
there are a growing number of stories about the chance of China directly
targeting US firms who do business in the country,” said Greg McKenna, chief
market strategist at AxiTrader.
“What comes to pass is still uncertain in that regard. What’s not
uncertain, though, is the resolve of US Commerce Secretary Wilbur Ross to
pursue China and try to change it — and other nations’ — actions.”
– Optimistic view –
Tokyo ended the morning session 0.9 percent lower , while Hong Kong and
Shanghai — which have led losses in Asia this week — were both 0.5 percent
lower in the morning.
Singapore shed 0.4 percent and Sydney was flat, while Manila, Wellington,
Taipei and Jakarta were also lower.
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Seoul was up slightly.
However, while trading floors are mostly a place of gloom, John Chong, head
of the investment-banking arm Maybank Kim Eng, was more upbeat for the
outlook.
“Asia is now better positioned to weather the volatility,” he said at a
conference in London.
“We believe investors will see real value emerging in Asian corporates
after the recent market tantrums and should capitalise on the opportunity.”
On currency markets, the pound held its ground after rising on the back of
news that the Bank of England’s top economist had backed lifting interest
rates despite Brexit uncertainty.
And the euro was up slightly after eurozone ministers declared the end of
Greece’s eight-year debt crisis with debt relief and a big cash payout as
part of a broad bailout exit deal.
Oil prices rallied more than one percent ahead of an output decision from
the Organization of the Petroleum Exporting Countries, which kicks off a key
meeting in Vienna later in the day.
Kingpin Saudi Arabia and non-member Russia are pushing to raise an 18-
month-old ceiling but others want to keep the status quo.
However, while an increase is widely expected there are concerns of a split
in the cartel — which accounts for about 40 percent of global production —
with Iran’s oil minister walking out of a key meeting with OPEC peers.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 0.9 percent at 22,500.45 (break)
Hong Kong – Hang Seng: DOWN 0.5 percent at 29,148.21
Shanghai – Composite: DOWN 0.5 percent at 2,862.22
Euro/dollar: UP at $1.1610 from $1.1607 at 2100 GMT
Pound/dollar: UP at $1.3256 from $1.3245
Dollar/yen: UP at 110.02 yen from 109.96 yen
Oil – West Texas Intermediate: UP 86 cents at $66.40 per barrel
Oil – Brent Crude: UP 95 cents at $74.00 per barrel
New York – Dow Jones: DOWN 0.8 percent at 24,461.70 (close)
London – FTSE 100: DOWN 0.9 percent at 7,556.44 (close)
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