Asia markets dive as Trump sparks N Korea, trade worries

24-May-2018 Intellasia | AFP | 6:00 AM Print This Post

Asian and European markets tumbled Wednesday after Donald Trump cast doubt on a planned summit with North Korean leader Kim Jong Un and appeared to hit out at a deal with China that averted a damaging trade war.

Trump warned there was “a very substantial chance it won’t work out” when asked about next month’s landmark talks, adding they could be delayed or even called off if the North did not agree to give up its nuclear weapons.

His comments, following a meeting with his South Korean counterpart Moon Jae-in, come after Pyongyang last week denounced US demands for unilateral disarmament, throwing the Singapore gathering into uncertainty.

The expected meeting, and the thawing of relations between the North and its rivals in recent months, has given markets hope that peace can be achieved on the Korean peninsula.

The US president’s comments helped spark a reversal on Wall Street, where all three main indexes ended the day in negative territory.

Adding to the selling were his comments on the weekend agreement to avert a trade war with China.

World markets surged Monday after US Treasury Secretary Steven Mnuchin and Chinese vice Premier Liu He said they had agreed to pull back from imposing threatened tariffs on billions of dollars of goods, and continue talks on a variety of trade issues.

However, Trump said he was “not satisfied” with the status of the talks, fuelling worries that the world’s top two economies could still slug out an economically painful trade war.

– Dash for safety –

“President Trump was keen to remind us overnight that the trade war is not about to leave the stage anytime soon,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

Just earlier in the day China had announced it would slash tariffs on auto imports to 15 percent from 25 percent, a move taken as a sign of easing frictions.

Tokyo ended 1.2 percent down, Hong Kong returned from a one-day break to drop 1.8 percent and Shanghai shed 1.4 percent.

Sydney slipped 0.2 percent, Singapore was one percent off and Wellington lost 0.7 percent.

Taipei, Manila and Bangkok were all sharply down but Seoul was up 0.3 percent, while Jakarta also moved higher.

In early European trade London and Frankfurt each fell 0.3 percent and Paris was off 0.4 percent.

“If you look at history, you find that geopolitics does rattle markets,” Vasu Menon, OCBC Bank vice president, told Bloomberg Television. “The markets are clearly quite nervous because we’ve had a good run and this is an excuse for the markets to take a breather.”

The dash for safer investments saw the yena go-to asset in times of uncertainty and turmoilrise against the dollar, with lingering concerns about a scandal enveloping Japanese prime minister Shinzo Abe adding to the cautious tone.

However, the US unit pushed up against the euro, pound and higher-yielding currencies such as the Korean won and Indonesian rupiah.

The release later Wednesday of minutes from the Federal Reserve’s most recent policy meeting is on traders’ radar, with hopes they will provide some clarity on the central bank’s plans for raising interest rates this year.

The European Central Bank will follow suit on Thursday.

– Key figures at 0810 GMT –

TokyoNikkei 225: DOWN 1.2 percent at 22,689.74 (close)

Hong KongHang Seng: DOWN 1.8 percent at 30,665.64 (close)

ShanghaiComposite: DOWN 1.4 percent at 3,168.96 (close)

LondonFTSE 100: DOWN 0.3 percent at 7,855.81

euro/dollar: DOWN at $1.1765 from $1.1781 at 2100 GMT

Pound/dollar: DOWN at $1.3400 from $1.3434

Dollar/yen: DOWN at 110.35 yen from 110.91 yen

OilWest Texas Intermediate: DOWN 22 cents at $71.98 (new contract)

OilBrent North Sea: DOWN 46 cents at $79.11

New YorkDow: DOWN 0.7 percent at 24,834.41 (close)–finance.html


Category: FinanceAsia

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