Asian shares tentative as Trump tempers Sino-US trade optimism

Reuters TOKYO | Updated on May 23, 2018 Published on May 23, 2018

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.15 per cent. File Photo   -  Reuters

US President Donald Trump says not pleased with recent trade talks with China

Asian shares edged up on Wednesday but investors were cautious after US President Donald Trump tempered optimism over progress made so far in trade talks between the world's two largest economies.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.15 per cent while Japan's Nikkei lost 0.2 per cent. On Wall Street, the S&P 500 shed 0.31 per cent overnight, losing steam after hitting a two-month high.

Trump said on Tuesday he was not pleased with recent trade talks between the United States and China, souring the improved market sentiment following weekend comments from US Treasury Secretary Steven Mnuchin that trade war is “on hold”. His remarks followed Beijing's announcement that it would cut import tariffs for automobiles and car parts.

Trump also floated a plan to fine ZTE Corp, and shake up its management as his administration considered rolling back more severe penalties. “The market probably became overly optimistic on Monday. The reality is the talks are still continuing as they haven't made headway on various issues, including intellectual properties,” said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.

Further weighing on prices of risk assets, Trump also said there was a “substantial chance” his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resistant to giving up his nuclear weapons.

Currency market

The cautious mood helped to underpin bonds. The 10-year US Treasuries yield stood at 3.063 per cent, off Monday's near seven-year high of 3.128 per cent. As lower US yields sap the appetite for the dollar, the euro traded at $1.1782, hovering above Monday's five-month low of $1.1717.

Against the yen the dollar slipped to 110.81 from Monday's four-month high of 111.395.

The biggest mover in the currency market was the Turkish lira, which fell almost two percent early on Wednesday to a record low after rating agencies sounded the alarm on Tuesday about plans by President Tayyip Erdogan to tighten his grip on monetary policy. The lira has fallen almost 15 per cent so far this month.

Commodities market

In commodities, oil prices held firm near 3-1/2-year highs on potential supply concerns surrounding Venezuela and Iran. US West Texas Intermediate (WTI) crude futures traded little changed at $72.22 a barrel, a 0.15 per cent loss. They touched $72.83 a barrel, the highest since November 2014, on Tuesday.

Brent futures stood at $79.56 a barrel. Last week, the global benchmark topped $80 for the first time since November 2014.

Published on May 23, 2018
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