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BCN-24,25
ASIA-MARKETS-UPDATE
Asian markets in retreat as data shows China growth slowing
HONG KONG, July 16, 2018 (BSS/AFP) – Asian markets fell Monday as data
showed that China’s economic growth slowed in the second quarter on the brink
of a potential trade war with the United States.
After a positive end to last week’s roller-coaster ride for equities,
investors shifted back into defensive mode in early business, with concerns
about the impact of tit-for-tat tariffs on the world’s top two economies.
Beijing said growth in April-June came in at 6.7 percent, in line with
forecasts in an AFP survey and better than the government’s annual target but
a shade down from the previous three months.
While the reading refers to the three months before US levies on billions
of dollars of Chinese goods were imposed, observers had already said the
country was likely to struggle with a trade face-off as leaders battle a debt
mountain and pollution.
At the same time the yuan and local stock markets are tumbling.
News Friday that China’s trade surplus with the US, a major cause of
Trump’s anger, hit a record in June has further fuelled tensions.
Mao Shengyong, a spokesman for the national statistics bureau, warned that
the trade row “will have an impact on the economies of both China and the
United States, and now that the world economy is deeply integrated, and the
industrial chain is globalised, many related countries will also be
affected”.
Shanghai closed down 0.6 percent and Hong Kong lost 0.2 percent in the
afternoon, while Sydney eased 0.4 percent. Singapore, Seoul, Wellington and
Taipei were also lower. Tokyo was closed for a public holiday.
– ‘Conflict and chaos’ –
There are hopes that Beijing and Washington can reach an agreement to avert
an all-out trade war, with some experts optimistic at China’s relatively
muted response to Donald Trump’s threats of further tariffs on $200 billion
of goods.
MORE/HR/1328
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BCN-25
ASIA-MARKETS-UPDATE 2 LAST HONG KONG
“Should the US eventually move ahead with these tariffs, China could not
escalate on an even basis given China only imports roughly $130 billion
annually from the US, suggesting they would either need to levy higher trade
tariffs on a small number of selected products or take the least attractive
measure of tactically weakening the yuan,” said Stephen Innes, head of Asia-
Pacific trading at OANDA.
“Hence the lack of immediate response from China, as administrators will be
ultra-careful not to send the wrong signal, triggering another market melt in
China.”
On Monday EU Council President Donald Tusk called on the United States,
China and Russia to cool tensions, warning they could spiral into “conflict
and chaos”.
On currency markets the pound held its own against the dollar after
fluctuating on Friday in reaction to an interview in which Trump hit out at
Prime Minister Theresa May’s handling of Brexit and appeared to dampen hopes
of a future trade deal.
He later took the edge off his remarks.
Traders are now looking ahead to congressional testimony by Federal Reserve
chief Jerome Powell, hoping for some insight on its plans for raising
interest rates in light of the trade war.
In early trade London rose 0.1 percent, Paris was flat and Frankfurt lost
0.1 percent.
– Key figures at 0720 GMT –
Hong Kong – Hang Seng: DOWN 0.2 percent at 28,471.94
Shanghai – Composite: DOWN 0.6 percent at 2,814.04 (close)
Tokyo – Nikkei 225: Closed for a public holiday
London – FTSE 100: UP 0.1 percent at 7666.66
Dollar/yen: UP at 112.36 yen from 112.35 yen at 2100 GMT Friday
Euro/dollar: UP at $1.1701 from $1.1686
Pound/dollar: UP at $1.3250 from $1.3236
Oil – West Texas Intermediate: DOWN 58 cents at $70.43 per barrel
Oil – Brent Crude: DOWN 71 cents at $74.62 per barrel
New York – Dow: UP 0.4 percent at 25,019.41 (close)
BSS/AFP/HR/1330