Asian stocks tread water, bracing for trade; oil down
AFP – Asian stocks were treading water Friday as traders braced for the introduction of tit-for-tat tariffs between the United States and China that experts warn could have a damaging impact on the world economy.
Shares in Shanghai and Hong Kong made little ground but Tokyo stocks followed Wall Street higher, as investors took some heart from news of trade talks between Washington and the European Union.
In Tokyo, the benchmark Nikkei 225 index advanced 0.89 percent or 190.70 points to 21,737.69.
Hong Kong’s Hang Seng index also edged higher by 0.18 percent but China’s main market, the Shanghai Composite Index, was fractionally down by 0.09 percent.
Investors broadly took to the sidelines with around $34 billion in US tariffs on Chinese goods set to be unveiled in the middle of the Asian trading session.
China has vowed to hit back immediately with a similar amount in tariffs.
But these could be just the first skirmishes in a trade war between the world’s top two economies, with financial markets worried about a knock-on effect on the wider global economy and the broader trading system.
Trump has threatened to impose tariffs on some $450 billion of Chinese goods — virtually all of China’s imports — as he seeks to advance his "America First" protectionist agenda.
Beijing has accused the US of "firing on the whole world" with the measures, pointing out that most of the Chinese goods under attack are made by companies with large foreign investment — including America.
Greg McKenna, chief market strategist at AxiTrader, said "there has been a subtle but distinct shift in the number of voices who are now saying this could all end up in a big global mess with a huge hit to global growth".
However, Hikaru Sato, senior technical analyst at Daiwa Securities, said the market "has already factored in" this stage of the US-China trade battle and is looking towards the next spat.
– Zero tariffs –
In the US and Europe, traders were cheered by comments from the US ambassador in Berlin, who told bosses of Germany’s biggest car firms that Washington was calling on the EU to bring tariffs to zero on car imports — in exchange for equal treatment by the US.
This drove European car stocks sharply higher and dragged up wider markets.
In New York, traders returned from the July 4 holiday in a relatively bullish mood, pushing the Dow Jones index up nearly one percent as they cheered solid US employment data.
Auto giants led the gains — buoyed by the headlines from Berlin — and tech stocks like Google parent company Alphabet and Facebook were also higher.
Oil prices were also sharply lower amid pressure by US President Donald Trump on the oil exporting cartel OPEC to cut prices.
– Key figures around 0300 GMT –
Hong Kong – Hang Seng: DOWN 0.3 percent at 28,104.94
Tokyo – Nikkei 225: UP 0.7 percent at 21,690.37
Shanghai – Composite: DOWN 0.4 percent at 2,722.36
Euro/dollar: UP at $1.1686 from $1.1662
Pound/dollar: DOWN at $1.3211 from $1.3228
Dollar/yen: UP at 110.65 from 110.39 yen
Oil – West Texas Intermediate: DOWN $1.04 at 72.81 per barrel
Oil – Brent Crude: DOWN 60 cents at 77.69 per barrel
New York – Dow: UP 0.8 percent at 24,356.74 (close)
London – FTSE 100: UP 0.4 percent at 7,603.22 (close)