Asia markets decline across the board as investors wait on China trade numbers

08-Feb-2020 Intellasia | CNBC | 6:02 AM Print This Post

Asia Pacific markets mostly fell on Friday, following three sessions of broad gains, as investors waited for the release of China’s January trade numbers and reacted to the impact of the coronavirus outbreak.

The trade data was initially supposed to be released around 11 a.m. Beijing time. Reuters reported that China’s general Administration of Customs could not immediately confirm whether the trade figures would still be released on Friday.

Mainland Chinese shares bucked the downward trend to bounce back slightly from declines earlier. The Shanghai composite rose 0.33 percent to close at 2,875.96. The Shenzhen component edged up slightly to 10,611.55, while the Shenzhen composite bounced 0.49 percent to 1,735.63.

The indexes had fallen sharply on Monday when Chinese markets reopened, following the Lunar New Year break, before they attempted a slow recovery in subsequent sessions.

In Hong Kong, the Hang Seng index dropped 0.50 percent in the afternoon. Gaming stocks listed on the bourse fell as Macao temporarily shut down its casinos amid the pneumonia-like coronavirus outbreak. Shares of Melco International Development fell around 2.35%, Wynn Macau lost 1.36 percent and Galaxy Entertainment tumbled around 1%.

Other Asia markets decline

Japan’s Nikkei 225 reversed gains and declined 0.19 percent to 23,827.98, while the Topix was down 0.28 percent to 1,732.14. Elsewhere, South Korea’s Kospi dropped 1.02%.

Carmakers in Japan and South Korea declined amid worries that the virus outbreak, which led to widespread quarantine efforts in China, might hit the global supply chain for various industries as Chinese factories remain shut.

Japan’s Mazda fell 3.59%, Toyota shares were off by 0.66%, Nissan was down 1.31%, Honda lower by 2.71%. South Korea’s Hyundai Motor reversed some of its earlier losses to trade down 0.76 percent and Kia Motors was down 1.94%.

Recently, Hyundai Motor said it will cut output as its supply of parts is disrupted, Reuters reported. Honda Motor has also extended a plant shutdown in China due to the outbreak.

Shares of Japan’s Fast Retailing, which owns the clothing stores chain Uniqlo and is a heavyweight on the benchmark index, dropped 1.65%. Reports said the company temporarily shut many of its stores in China as a result of the coronavirus outbreak.

Australia shares followed the downward trend, with the ASX 200 down 0.38 percent to 7,022.60. Miners and oil stocks declined.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.69 percent in the afternoon.

China’s trade data due

China’s exports and imports figures for January are due to be released. The country’s dollar-denominated exports and imports for December had beat expectations. In December, China’s trade surplus with the US was $23.18 billion down from $24.6 billion in November.

The world’s second-largest economy on Thursday said it had cut retaliatory tariffs on some US goods by half.

After being locked in a trade war where each side slapped tariffs on billions of dollars worth of goods from the other, the US and China signed a phase one trade deal in January that suspended the trade war.

Washington said the partial agreement included a clause for China to purchase billions of dollars’ worth of agricultural goods. As part of the deal, the Trump administration scrapped tariffs initially set to take effect last December and agreed to cut some duties.

The Asian giant’s economy, however, is now under the shadow of the ongoing coronavirus outbreak, which has led to growth forecasts being cut.

S&P Global Ratings on Friday issued a report where it revised its estimation of China’s GDP growth for 2020 from 5.7 percent before the outbreak to 5%, stating that “most of the economic impact of coronavirus will be felt in the first quarter, and China’s recovery will be firmly in place by the third quarter of this year.”

U.S stocks, meanwhile, soared to all-time highs on the back of those tariff cuts, strong corporate earnings and economic data.

The Dow Jones Industrial Average closed 88.92 points higher, or 0.3%, to 29,379.77. The S&P 500 also climbed 0.3 percent to close at 3,345.78. The Nasdaq Composite advanced 0.7 percent to 9,572.15.

Currencies and oil

The US dollar index, which tracks the greenback against a basket of its peers, was last at 98.472, climbing from levels near 97.600 earlier in the week.

The Japanese yen traded at 109.94 per dollar, weakening from levels near 108.6 at the start of the week. The Australian dollar declined 0.12 percent to $0.6716, gaining from levels near $0.6690 on Monday.

Oil prices jumped on Friday during Asia hours, with US crude futures up 0.16 percent to $51.11 per barrel, and Brent higher by 0.42 percent to $55.16 per barrel.

Year-to-date, prices are still down but traders appeared optimistic after a committee advising OPEC and its allies met for three days in Vienna this week. It recommended a production cut of 600,000 barrels a day to provide some relief to the oil market.

To be clear, the Joint Technical Committee, made up of representatives of oil-producing countries, is not a decision-making body; it only makes recommendations to OPEC and its allies, which include Russia.


Category: FinanceAsia

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