Asian stocks fall as traders question next move in trade war

Reuters | Updated on November 06, 2019 Published on November 06, 2019

A woman stands in front of a display showing market indices at the Tokyo Stock Exchange (file photo)   -  Reuters

MSCI's broadest index of Asia-Pacific shares outside Japan has eased 0.12 per cent

Asian shares fell on Wednesday for the first time in four trading sessions as investors awaited new developments that might scale back a bruising trade war between the US and China.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.12 per cent. Australian shares were down 0.55 per cent, Chinese stocks fell 0.25 per cent, Japan's Nikkei stock index rose 0.21 per cent.

The pan-region Euro Stoxx 50 futures were down 0.03 per cent, German DAX futures were down 0.06 per cent, while FTSE futures were down 0.29 per cent.

Treasury yields fell slightly and crude oil futures fell as investors took a breather as US and Chinese negotiators continued their efforts to seal a preliminary trade deal. The world's two biggest economies have signalled they are pushing hard for a 'phase one' trade agreement, possibly some time this month.

The dollar held onto overnight gains against the yen and the euro after better-than-expected data on the US services sector, but some analysts warn it will be difficult to shake lingering concern about the global economic outlook.

“We've had a good run-up, but there may be some consolidation,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

“The trade war is the biggest reason that global growth has weakened over the past 18 months. We would like to see tariffs scaled back. We're still waiting for clearer signs of a resolution.”

US stock futures erased earlier losses to inch 0.01 per cent higher on Wednesday in Asia after the S&P 500 gave up just 0.01 per cent on Tuesday, having reached a record high in the previous trading session.

Traders and investors hope a preliminary Sino-US trade pact will roll back at least some of the punitive tariffs that Washington and Beijing have imposed on each other's goods, but it is still uncertain when or where US President Donald Trump will meet Chinese President Xi Jinping to sign the agreement.

In the onshore market the yuan traded at 6.9930 versus the dollar, approaching a three-month high as currency traders took their cue from hopes for a trade deal.

Treasury prices rose slightly in Asia, recovering from a sell-off on Tuesday after data from the Institute for Supply Management (ISM) showed the US services sector expanded more than expected in October.

The yield on benchmark 10-year Treasury notes fell to 1.8513 per cent in Asia on Wednesday, while the two-year yield fell slightly to 1.6207 per cent.

A jump in oil prices on Tuesday ran out of steam on Wednesday. US crude fell 0.37 per cent to $57.02 per barrel and Brent crude fell 0.40 per cent to $62.71 per barrel.

Elsewhere in the currency market, the dollar continued to benefit from the positive ISM data.

The dollar traded at 109.06 yen, close to its highest since Aug. 1. The greenback also changed hands at $1.1076 per euro, approaching its highest level since Oct. 16.




Published on November 06, 2019
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