Asian markets down as attention turns back to trade talks

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

Chinese vice Premier Liu He is due in Washington for fresh talks aimed at heading off a trade war with the United States

Asian markets mostly fell on Tuesday as trade moves back into view with China and the US holding more high-level talks this week, while oil prices held gains as tensions in the Middle East simmer.

A recent run-up in equities over the past week has also led to profit-taking, with Hong Kong hit after six straight days of gains.

US markets rose again as Chinese vice Premier Liu HePresident Xi Jinping’s right-hand man on economic issuesheaded to Washington on Tuesday for a new round of talks aimed at heading off a trade war between the economic giants.

There are hopes the two sides can hammer out an agreement to end a spat that has seen both sides threaten tariffs on billions of dollars of goods.

Donald Trump’s call to help get Chinese telecom equipment maker ZTE “back into business fast” soothed nerves, while Commerce Secretary Wilbur Ross said Monday he was exploring “alternative remedies” for the firm, which was in April banned from buying crucial US technology for seven years.

“China is reportedly close to removing tariffs on agricultural products in exchange for relief for ZTE,” said Stephen Innes, head of Asia-Pacific trade at OANDA. “It helps explain why President Trump said he’d work with President Xi on this company.”

The talks come as US officials try to reach agreements with Canada and Mexico on revising their three-way trade pact, while EU steel tariff exemptions are due to end on June 1.

- ‘Hornet’s nest’ -

Hong Kong was one percent lower after racking up gains of more than five percent over the previous six sessions, while Tokyo ended 0.2 percent down.

Sydney shed 0.6 percent, Singapore fell 0.4 percent and Seoul sank 0.7 percent, with Wellington, Taipei, Bangkok and Jakarta also lower.

However, there were gains in Shanghai, Manila and Kuala Lumpur.

And Mumbai’s Sensex jumped 0.6 percent as prime minister Narendra Modi’s BJP looked on course to win a key state election just a year ahead of national polls.

Concerns about the already tinderbox Middle East have helped put upward pressure on oil prices, with deadly clashes in Gaza during the opening of the US embassy in Jerusalem coming less than a week after Trump ripped up the Iran nuclear deal.

“In general, the market is wholly focused on the hornet’s nest in the Middle East that is an accident waiting to happen,” Innes added.

While both main crude contracts dipped marginally Tuesday, they are still at highs not seen since November 2014, with economic uncertainty in major producer Venezuela also playing a key role.

The increase in oil prices is helping fan inflation expectations in the United States, which has given fuel to talk that the Federal Reserve will lift interest rates three more times this year.

While the dollar was flat against its main peers it was sharply up against most high-yielding currencies including the South Korean won, Mexican peso and Indonesian rupiah.

In early European trade London and Paris each fell 0.2 percent while Frankfurt shed 0.3 percent.

- Key figures around 0720 GMT -

TokyoNikkei 225: DOW 0.2 percent at 22,818.02 (close)

Hong KongHang Seng: DOWN 1.0 percent at 31,227.04

ShanghaiComposite: UP 0.6 percent at 3,192.12 (close)

LondonFTSE 100: DOWN 0.2 percent at 7,694.27

euro/dollar: DOWN at $1.1925 from $1.1931 at 2100 GMT

Pound/dollar: DOWN at $1.3550 from $1.3556

Dollar/yen: UP at 109.92 yen from 109.65 yen

OilWest Texas Intermediate: DOWN nine cents at $70.87

OilBrent North Sea: DOWN two cents at $78.21 per barrel

New YorkDow: UP 0.3 percent at 24,899.41 (close)–finance.html


Category: FinanceAsia

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