Daily Times

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 1.1 percent, extending a rally into 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 dropped 0.2 percent on a stronger yen.

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.

Pound struggles

Energy firms fell in line with a sharp sell-off in oil, which followed a report showing US stockpiles fell less that 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.

Key figures

Tokyo – Nikkei 225: DOWN 0.2 percent at 22,598.39 (close)

Hong Kong – Hang Seng: UP 1.1 percent at 28,682.19

Shanghai – Composite: UP 1.8 percent at 2,794.38 (close)

London – FTSE 100: DOWN 0.5 percent at 7,741.60

Euro/dollar: DOWN at $1.1603 from $1.1611 at 2100 GMT

Pound/dollar: DOWN at $1.2872 from $1.2884

Dollar/yen: DOWN at 110.90 yen from 110.96 yen

Oil – West Texas Intermediate: UP 12 cents at $67.06 per barrel

Oil – Brent Crude: UP 22 cents at $72.50 per barrel

New York – Dow Jones: DOWN 0.2 percent at 25,583.75 (close).

Published in Daily Times, August 10^th 2018.