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ASIA-MARKETS-UPDATE
Asian markets start week with losses as trade fears return
HONG KONG, Sept 3, 2018 (BSS/AFP) – Asian markets opened the week on a
negative note as trade tensions returned to the fore, with Donald Trump
eyeing fresh tariffs on a swathe of Chinese goods and NAFTA talks with Canada
hitting a wall.
The optimism that permeated trading floors at the start of last week has
been replaced by a now-familiar sense of dread after the US president hit out
at Ottawa over the weekend as the two sides struggle to hammer out a new
deal.
In a tweet over the weekend, Trump threatened to exclude Canada from a new
North American Free Trade Agreement after negotiations to rewrite the 1994
pact ended without agreement.
He said there was “no political necessity to keep Canada in the new NAFTA
deal. If we don’t make a fair deal for the US after decades of abuse, Canada
will be out”.
While talks will resume Wednesday, his outburst seemed designed to ramp up
pressure on Canadian negotiators.
The comments threw a spanner in the works for investors after the US and
Mexico said earlier in the week they had agreed a revised pact.
Trump also roiled markets last week by saying he wanted to impose tariffs
on $200 billion of Chinese imports as soon as public consultation ends on
Thursday, adding to the $50 billion already targeted.
That rekindled fears of an all-out trade war between the world’s top two
economies, while European Commission chief Jean-Claude Juncker on Friday
warned the EU would retaliate in kind if Trump pushes through duties on
foreign cars.
The end of the month sees the Federal Reserve’s next policy meeting at
which it is expected to lift interest rates for a third time this year, with
analysts poring over its statement for an idea about a possible fourth rise
before January.
– ‘Looking for exits’ –
“Batten down the hatches as the main feature that stands out about this
week — and the month of September for that matter — is (that) the market
risk is massive as the central bank and the political worlds collide,” said
Stephen Innes, head of Asia-Pacific trading at OANDA.
MORE/HR/1445
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
“Indeed, such collisions tend to escalate volatility exponentially, and I
expect some episodic moments that will have traders looking for the exits or
end up over the barrel.”
Japan’s Nikkei ended 0.7 percent lower, Hong Kong was down 0.6 percent and
Shanghai fell 0.2 percent. Singapore lost 0.4 percent, Seoul shed 0.7 percent
and Sydney was 0.1 percent off.
There were also losses in Wellington, Taipei, Manila and Jakarta.
In early European trade London rose 0.5 percent but Paris dropped 0.3
percent and Frankfurt fell 0.4 percent.
On currency markets, the Turkish lira halved earlier losses to sit one
percent lower as the central bank said it will take the “necessary actions to
support price stability” in September after recent developments suggested
“significant risks to price stability”.
The comment followed data showing inflation hit a 15-year high of 17.9
percent last month as a dive in the currency — it is down about 40 percent
this year — filters through to consumers.
However, the bank has refused to lift interest rates to combat the surging
prices, putting pressure on the embattled economy.
The Indonesian rupiah is also hovering around lows last seen during the
Asian financial crisis 20 years ago, hit by a ballooning current account
deficit.
Other emerging-market and high-yielding currencies were mixed, with the
Australian dollar 0.3 percent up, South Korea’s won 0.2 percent higher, the
South African rand 0.1 percent lower and the Russian ruble down 0.4 percent.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.7 percent at 22,707.38 (close)
Hong Kong – Hang Seng: DOWN 0.6 percent at 27,712.54 (close)
Shanghai – Composite: DOWN 0.2 percent at 2,720.73 (close)
London – FTSE 100: UP 0.5 percent at 7,467.03
Euro/dollar: UP at $1.1611 from $1.1599 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.2918 from $1.2961
Dollar/yen: DOWN at 111.00 yen from 111.02 yen
Oil – West Texas Intermediate: DOWN two cents at $69.78 per barrel
Oil – Brent Crude: UP 23 cents at $77.87 (new contract)
New York – Dow Jones: DOWN 0.1 percent at 25,964.82 (close)
BSS/AFP/HR/1450