Asian markets swing after bruising week with trade center stage

HONG KONG, China (AFP) — Asian equities were mixed on Friday after another painful week as fears of an all-out trade war between Beijing and Washington keep investors on edge, while China’s stock market was toppled by Japan as the world’s number two.

While Apple provided a boost for Wall Street after hitting the $1 trillion market capitalization mark, the prospect of the world’s top two economies exchanging painful tariffs on hundreds of billions of dollars of goods is stunting optimism.

Shares, which have been on the slide for several weeks owing to the increasingly heated trade row, took another hit this week when the White House said it was considering more than doubling threatened tariffs on $200 billion of Chinese imports.

Beijing responded by saying it would not give in to “blackmail”.

“There are genuine concerns about this trade war underlying markets, which makes any genuine retaliation from China, rather than the current rhetorical approach, an issue for markets,” said Greg McKenna, chief market strategist at AxiTrader.

However, while he warned “the risks of escalation remain high”, he added that “the market still thinks (the latest US threat) is just a negotiating tactic”.

Hong Kong lost 0.1 percent and Shanghai sank one percent, after both swung in and out of positive territory through the day, while traders on the mainland largely brushed off promises of government support to the struggling economy.

– China ranking drop –
Adding to the pain of recent losses, China’s stock market was overtaken as the world’s second-biggest by Japan’s Friday, having been hit by trade war fears and slowing economic growth.

Bloomberg News figures showed Chinese stocks were worth $6.09 trillion, compared with $6.17 trillion in Japan. The US market is worth $31 trillion.

“Investors are paying attention to government policies as the US-China trade war will remain uncertain for now,” Yoshihiro Okumura, general manager at Chibagin Asset Management, told AFP in Tokyo.

“On the other hand, Japanese companies are showing strong results in general, sustaining share prices on the Tokyo Stock Exchange.”

The yuan also extended losses on trade war worries and concerns about growth. However, Ian Hui, global market strategist at JP Morgan Asset Management, said in a note: “Chinese officials will remain wary of letting the yuan weaken too much, as that may risk issues for capital flight and financial stability.”

Tokyo ended up 0.1 percent, while Sydney edged down 0.1 percent and Singapore slipped 0.2 percent.

Seoul, Wellington, Taipei, Mumbai and Manila were all higher.

In early trade London and Paris each rose 0.3 percent, while Frankfurt added 0.2 percent.

Attention now shifts to the release later Friday of US jobs data, which will provide the latest snapshot of the US economy and give an idea about the Federal Reserve’s plans for future interest rate hikes.

The pound struggled to break back against the dollar after Thursday’s drop that came as the Bank of England’s hike in interest rates to a nine-year high was offset by its tepid outlook for further increases in the near term owing to Brexit uncertainty.

– Key figures at 0810 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 22,525.18 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 27,676.32 (close)

Shanghai – Composite: DOWN 1.0 percent at 2,740.44 (close)

London – FTSE 100: UP 0.3 percent at 7601.50

Euro/dollar: UP at $1.1579 from $1.1584 at 2100 GMT

Pound/dollar: UP at $1.3008 from $1.3016

Dollar/yen: UP at 111.71 yen from 111.66 yen

Oil – West Texas Intermediate: DOWN eight cents at $68.88 per barrel

Oil – Brent Crude: DOWN five cents at $73.40 per barrel

New York – Dow Jones: FLAT at 25,326.16 (close)

© Agence France-Presse