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Asian markets mostly up as dealers take China tariffs in stride

Asian markets mostly up as dealers take China tariffs in stride

HONG KONG, Aug 9: Asian investors on Thursday largely brushed off China’s tit-for-tat response to Donald Trump’s latest tariff threats, with most markets rising, but concerns about the impact of an all-out trade war are keeping optimism in check. Beijing said on Wednesday it would impose 25 percent tariffs on $16 billion of US goods from August 23, retaliating in kind to a warning from US officials the day before and escalating a crisis that pits the world’s top two economies against each other. While the row has sent global markets into convulsions this year, the latest development had been widely expected, with Wall Street ending mixed. Hong Kong jumped 0.9 percent, extending its rally to a fourth day, while Shanghai surged 1.8 percent following healthy Chinese inflation data. Seoul was 0.1 percent higher, Sydney added 0.5 percent and Wellington rose 0.8 percent, while Bangkok gained 0.1 percent. However, Tokyo stocks slipped Thursday, dragged by a stronger yen and caution ahead of Japan-US trade talks. The benchmark Nikkei 225 index dropped 0.20 percent, or 45.92 points, to 22,598.39, while the broader Topix index lost 0.26 percent, or 4.55 points, to 1,740.16. “After Wall Street ended mixed overnight, investors became wary of seeing a firmer yen in the morning. That meant the Nikkei opened under selling pressure,” Okasan Online Securities chief strategist Yoshihiro Ito said in a commentary. “Ahead of the Japan-US trade talks, a wait-and-see mood prevailed in the market,” he said. The Nikkei trimmed earlier losses once Chinese shares started moving into positive territory, he added. The dollar sank to 110.71 yen in the morning. from 110.96 yen in New York Wednesday, before rebounding in the afternoon. In the midst of a bitter trade spat with China, US Trade Representative Robert Lighthizer is to meet Japan’s economic revitalisation minister Toshimitsu Motegi in Washington Thursday. Japan is hoping to win concessions on threatened US auto tariffs, which pose a threat to the industry if implemented. “Although concrete outcomes are not expected, we may still get a sense of how far apart or not the two nations are,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, said in a client note. Automakers were lower, with Toyota down 1.01 percent at 6,990 yen. Selling was particularly heavy for Suzuki Motor, along with Mazda and motorcycle maker Yamaha, after the government said the firms cheated on fuel-efficiency and emissions tests in the latest data-falsification scandal to hit Japanese companies. Suzuki tumbled 6.04 percent to 6,944 yen and Mazda lost 1.30 percent to 1,327 yen. Yamaha Motor gave up 4.63 percent to 2,820 yen. SoftBank Group fell 0.38 percent to 10,490 yen after Bloomberg News reported Tesla chief Elon Musk and SoftBank head Masayoshi Son held unsuccessful talks last year about the Japanese group investing in the US electric car maker. Manila was down 0.8 percent after data showed the Philippines economy massively undershot growth expectations in April-June, with the government citing the temporary closure of popular holiday island Boracay as a key reason. Energy firms fell in line with a sharp sell-off in oil, which followed a report showing US stockpiles fell less than expected, while investors are also fretting over the effects of a China-US trade war on demand. Both main contracts plunged more than three percent on Wednesday, with analysts saying figures pointing to a drop in Chinese imports from the US were also detrimental. WTI and Brent were slightly higher Thursday. “Oil fell out of bed last night as worries over Chinese demand surfaced after the trade data yesterday and in the wake of China’s hitting back in the tariff war targeting energy products,” said Greg McKenna, chief markets strategist at AxiTrader. On currency markets the ruble extended Wednesday’s losses and is now down more than four percent against the dollar after Washington imposed fresh sanctions over Russia’s involvement in the attempted killing of a former spy in Britain. And the pound also remains rooted near one-year lows on fears Britain will leave the European Union next year with no deal to trade with the bloc, with the country’s trade secretary and central bank boss recently warning the chances of such a scenario are increasing. “The market is clearly getting more nervous over the possibility of a no-deal Brexit, which would be a messy outcome for the UK economy,” said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank. In early trade London fell 0.5 percent, Paris shed 0.3 percent and Frankfurt was off 0.1 percent. US stock markets largely shrugged off latest volley of tariffs in the escalating trade war between the United States and China, although oil prices fell sharply. In late morning trading, Wall Street’s main indices were mixed, with the blue-chip Dow Jones Industrial Average slipped less than a tenth of a percent. However the broader S&P 500 and tech-heavy Nasdaq Composite both climbed despite China announcing it will impose 25 percent tariffs on a further $16 billion of US goods, making good on its promise to retaliate against new American levies. The US government announced late Tuesday that 25 percent tariffs on $16 billion in Chinese goods would go into effect on August 23. “Markets had a muted reaction to China’s announcement that it plans to impose tariffs on $16 billion worth of US goods, starting on 23 August,” said market analyst David Madden at CMC Markets UK. “The token retaliation from Beijing keeps the trade spat alive, and it seems like China were doing it to send a message, rather than to inflict financial pain on the US,” he added. European markets were less sanguine, with both Frankfurt and Paris stocks moving downwards. However London’s benchmark FTSE 100 index carved out a gain of 0.8 percent. “It is not hard to find the cause of the FTSE 100’s outperformance today,” said Chris Beauchamp, chief market analyst at online trading firm IG. “The pound continues its slide versus the dollar on fears of a ‘No Deal’ Brexit, providing at least a pleasing tailwind for UK stocks.” The pound sank this week on growing concern of a chaotic no-deal exit for Britain from the European Union in March 2019. The weak currency however lifts shares in multinationals that derive the lion’s share of their earnings in dollars. Asia equities stuttered Wednesday, with Tokyo down 0.1 percent, Shanghai shedding 1.3 percent, but Hong Kong ended up 0.4 percent in value. Global stock prices had risen Tuesday on the back of solid second-quarter US corporate earnings which temporarily took investor attention off festering trade wars, dealers said. Both the S&P 500 and the Nasdaq Composite are not far below records. Oil prices, which had climbed this week on expectations that renewed US sanctions on Iran will reduce supplies to the market, fell sharply on data showing ample supplies in the United States. “A weaker-than-expected fall in crude inventories has taken the wind out of oil’s sales, with both Brent and WTI down by more than 2 percent,” said IG’s Chris Beauchamp. “Signs of weaker demand in the US have trumped the bullish case for oil based on Iran tensions, which have stubbornly refused to pick up in recent days,” he added. (Inputs taken from AFP, Reuters)

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