November 08, 2019: Asian markets were broadly lower Friday as investors took their foot off the pedal after another healthy week, with eyes fixated on the next move in the China-US trade talks.
News out of Beijing that it had agreed a plan with the US to start rolling back tariffs if negotiations progress fired a rally in late business on Thursday, and helped the Dow and S&P 500 to more records.
The announcement fanned hopes the world's economic superpowers — who are currently finalising a mini trade pact as part of a wider deal — can resolve their long-running tariffs war that has hobbled the global growth outlook.
It also eased worries about the negotiations caused by reports that a hoped-for signing ceremony this month between Donald Trump and Xi Jinping could be delayed until December.
“The elevation of discussion from a trade truce to a possible tariff rollback is important and suggests both China and the US have come under pressure to seal a deal,” said National Australia Bank's Tapas Strickland, in a note.
But dealers were unable to carry the baton further in Asia after the White House failed to comment on the Chinese claims, while a report said there was some opposition within the administration to such a move.
Adding to the malaise was a certain amount of profit-taking after another strong week across equity markets, which have been on a rally since last month as the trade talks showed progress.
– 'Critical piece of the puzzle' – Referring to the lack of response from Washington, AxiTrader's Stephen Innes said: “Missing this critical piece of the puzzle, there remains a touch of uncertainty.” He added that, assuming the “phase one” agreement is signed, “it's hard to expect much, if anything else, to propel expectations in a positive direction further. If the phase one deal is signed, the markets will then pivot to the degree of rollbacks in exchange for harmony on remaining structural issues.” Hong Kong fell 0.4 percent in the morning after a six-day advance, including a healthy bounce Thursday in reaction to the tariffs news. Sydney and Taipei each fell 0.2 percent, Singapore shed 0.6 percent, Seoul dropped 0.3 percent and Manila gave up 0.9 percent.
However, Shanghai was up 0.2 percent and Tokyo went into the break 0.1 percent higher.
On currency markets, the pound remained subdued after taking a hit on Thursday from an economic growth downgrade for 2020 by the Bank of England that fuelled speculation it could cut interest rates soon.
The central bank kept rates on hold but the decision was split for the first time in more than a year, with two dissenters calling for a reduction in borrowing costs to fend off the feared downturn.
– Key figures around 0230 GMT – Tokyo – Nikkei 225: UP 0.1 percent at 23,352.10 (break) Hong Kong – Hang Seng: DOWN 0.5 percent at 27,721.62 Shanghai – Composite: UP 0.2 percent at 2,985.02 Pound/dollar: UP at $1.2816 from $1.2813 at 2100 GMT Euro/pound: UP at 86.25 pence from 86.23 pence Euro/dollar: DOWN at $1.1052 from $1.1049 Dollar/yen: DOWN at 109.24 yen from 109.29 yen West Texas Intermediate: DOWN 30 cents at $56.85 per barrel Brent North Sea crude: DOWN 19 cents at $62.10 per barrel New York – Dow: UP 0.7 percent at 27,674.80 (close) London – FTSE 100: UP 0.1 percent at 7,406.41 (close).