Asian stock markets retreat after surge on China tariff cut

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

Asian stock markets retreated Friday following a surge after China announced a tariff cut on US imports.

Market benchmarks in Shanghai, Tokyo, Hong Kong, Seoul and Sydney all declined. Major Asian markets jumped more than 2 percent on Thursday after Beijing said it will cut duties on $75 billion of US goods as part of a trade truce with Washington.

Wall Street closed higher for a fourth day, propelled by gains for technology stocks and strong corporate earnings reports.

China’s tariff cut “boosted sentiment,” though “gains were tempered by continued concerns around the impact of the coronavirus outbreak,” Mizuho Bank said in a report.

Chinese factories and offices are starting to reopen following an extended Lunar New Year holiday, but companies are forecasting big revenue declines due to the closure of stores, amusement parks, cinemas and other businesses.

Japan’s Fast Retailing announced it as closed 350 stores, or about half of its 750 outlets in China to comply with quarantine regulations, while Toyota Motor Corp. said it was extending production stoppages at its China factories by an extra week, to February 16. Nissan Motor Co. said January sales of the company and its local partners fell nearly 12 percent in January from a year earlier due to the virus outbreak and extended Lunar New Year holidays.

Beijing’s tariffs reductions, which follow US cuts last month on Chinese goods, are part of a “Phase 1″ trade agreement with Washington aimed at ending their fight over China’s technology ambitions and trade surplus. There was no indication China altered its cuts in response to the virus outbreak, but the surprise announcement helped to buoy market sentiment.

Hong Kong’s Hang Seng index fell 0.6 percent to 27,320.42 and the Shanghai Composite Index was off 0.2 percent at 2,861.72. Tokyo’s Nikkei 225 lost 0.2 percent to 23,827.98.

The Kospi in Seoul sank 0.7 percent to 2,211.95 and Sydney’s S&P-ASX 200 lost 0.4 percent to 7,022.60.

On Wall Street, the benchmark S&P 500 index rose 0.3 percent to 3,345.78. The Dow Jones Industrial Average gained 0.3%. The Nasdaq climbed 0.7 percent to 9,572.15.

Beijing is also promising tax cuts and other help to businesses in a bid to offset the economic blow from the virus outbreak that has put the world’s second-largest economy on lockdown. The extent of potential losses is unclear.

Worries about the potential global economic fallout from the outbreak spurred a mid-January slump for US stocks. Investors appear to have set aside those concerns this week, focusing instead on encouraging US economic data and company earnings reports.

Cognisant led the gainers in the technology sector Thursday, vaulting 9.8%. The information technology consulting firm’s fourth-quarter earnings topped Wall Street’s expectations.

Twitter surged 15 percent after the messaging service reported surprisingly good growth for daily users and solid revenue in the fourth quarter. The most recent quarter marks the first time the company’s revenue topped $1 billion.

ENERGY: Benchmark US crude gained 27 cents to $51.22 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 20 cents on Thursday to close at $50.95. Brent crude, used to price international oils, added 34 cents to $55.27 per barrel in London. It fell 35 cents the previous session to $54.93.

CURRENCY: The dollar declined to 109.95 yen from Thurdsay’s 109.97 yen. The euro rose to $1.0982 from $1.0979.


Category: FinanceAsia

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