Asian stocks recover after news of US-China trade talk

Asia stocks opened sharply lower on Thursday, joining a global sell-off on concerns over Turkey’s financial crisis but later pared losses on news that China and the US would hold trade talks.

Equities across the region suffered steep losses at the opening bell, with Tokyo and Shanghai off by more than one percent, dragged down by a weak session on Wall Street as traders fretted over possible contagion from Turkey’s currency crisis.

Japan’s main Nikkei 225 index shed 1.20 percent in early trade and China’s benchmark Shanghai Composite was off by 1.17 percent after another day of volatile trading driven by Turkey.


On Wednesday, Ankara hiked tariffs on imports of several US goods in retaliation for American sanctions, the latest step in a tit-for-tat spat between the two NATO allies that shows little sign of easing.

The crisis has sent the Turkish currency into free-fall and sparked concerns that European banks and other emerging markets exposed to the unit could also suffer.

A bearish mood saw European markets close down nearly two percent and the broad US S&P 500 market off by nearly one percent.

However, the lira managed to claw back some ground after losing just under a quarter of its value on Friday and Monday, a loss that had prompted fears of a fully-fledged economic crisis in the critical emerging economy.

And equities in Asia staged a fightback after news hit the wires of upcoming talks between the US and China, currently embroiled in a trade spat that economists warn could harm the global economy.

China’s Vice Commerce Minister Wang Shouwen, the deputy representative on international trade negotiations, will meet with a senior US treasury official, David Malpass, at the invitation of the United States, the ministry in Beijing said in a statement.

Traders saw a glimmer of hope of a detente in the ongoing trade battle that has seen the two sides hit each other with reciprocal tariffs on goods worth $34 billion, with much more threatened.

The two countries plan to launch a new round of tariffs on $16 billion worth of goods from each country on August 23.



“It is hard to tell how the talks will go but it’s a positive signal that the two countries are looking for some compromise plan,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.

“If they were determined to fight it out, they wouldn’t meet,” he told AFP.

A few hours into the trading session, the Nikkei was back in positive territory while markets in China and Hong Kong had almost erased all of their losses.

Key figures around 0300 GMT 

Dollar/Turkish lira: STABLE at 5.98 lira

Euro/dollar: UP at $1.1381 from $1.1349

Pound/dollar: UP at $1.2720 from $1.2700

Dollar/yen: UP at 110.86 from 110.73 yen

Tokyo – Nikkei 225: UP 0.01 percent at 22,206.66

Hong Kong – Hang Seng: DOWN 0.1 percent at 27,290.26

Shanghai – Composite: DOWN 0.2 percent at 2,716.31

Oil – Brent Crude: UP 45 cents at $71.21 per barrel

Oil – West Texas Intermediate: UP 14 cents at $65.15 per barrel

New York – Dow Jones: DOWN 0.5 percent at 25,162.41 (close)

London – FTSE 100: DOWN 1.5 percent at 7,497.87 (close)

/vvp

source: business.inquirer.net

Trade tensions torpedo oil, US sanctions hammer Russian rouble

SYDNEY — Asian shares were subdued on Thursday after a new round of tit-for-tat tariffs in the US-Sino trade conflict torpedoed oil prices, while the Russian rouble tumbled as the US slapped fresh sanctions on the country.

MSCI's broadest index of Asia-Pacific shares outside Japan barely budged as caution dominated. Japan's Nikkei slipped 0.5 percent, not helped by a shock slump in core machinery orders.

Early Thursday, China's state broadcaster said China must counteract US tariffs and Beijing had the confidence to protect its own interests as well as the means to do so.

China had already announced additional tariffs of 25 percent on $16 billion worth of US imports from fuel to autos. The tariffs will apply to billions of dollars in U.S. gasoline, diesel and other oil products, though not crude.

Analysts at ANZ noted there were also reports President Xi Jinping had asked China's major oil companies to increase domestic output to safeguard the country's energy security.

The oil market took the news hard with selling escalating as major technical levels broke.

US crude was last down 12 cents at $66.82 per barrel, having shed 3.2 percent on Wednesday, while Brent was off 2 cents at $72.26.

On Wall Street, trade-sensitive industrial companies were the biggest drag on the Dow, with declines led by Boeing and Caterpillar Inc.

The Dow fell 0.18 percent, while the S&P 500 lost 0.03 percent and the Nasdaq added 0.06 percent.

More sanctions

In currency markets, the Russian rouble sank after Washington said it would impose fresh sanctions because it had determined that Moscow had used a nerve agent against a former Russian agent and his daughter in Britain.

There were also reports of a new US Senate bill that would impose widespread sanctions on Russia for election meddling.

The rouble duly slid to its lowest since late 2016, with the dollar buying 65.50 roubles having jumped 3.4 percent overnight.

The pound skidded to its lowest against the dollar and euro in almost a year as fears grew Britain might leave the EU without a deal on trade with Brussels.

Traders reported a significant increase in investors hedging against a 'no-deal' Brexit, an event which could send sterling into free fall and hurt the economy by raising trade barriers with the UK's biggest export market.

Sterling was last trading at $1.2877, having dropped 0.4 percent overnight.

The Japanese yen seemed to be catching a bid as a traditional safe haven, with the dollar easing to 110.81 yen after stretching as high as 111.44 on Wednesday.

The euro was relatively steady at $1.1611, while the dollar index was a shade firmer at 95.098.

The New Zealand dollar shed 0.9 percent to a two-year trough at $0.6682 after the country's central bank took a dovish turn, pledging to keep rates at record lows well into 2020.

The Reserve Bank of New Zealand (RBNZ) said rates were likely to be on hold for longer and cut its forecasts for economic growth this year and next. —Reuters