Asian markets were relatively unstable on Monday after interest rate concerns emanated from concerns over sharp rise in US Interest rates fueled by escalating US China trade wars.
US markets plunged on Friday last week after US President Trump announced fresh new tariffs worth $100 billion worth on Chinese imports, to which Beijing responded by saying it is standing firm and will reply with tit for every tat from US.
President Trump’s announcement came after worsening trade relations between the two nations, who have been under the limelight after the US taxed imports of steel and aluminum, coupled by taxes of $50 billion on goods from China in the next week.
China responded by unveiling new levies worth $50 billion on major US exports especially targeting the US agricultural, auto, and airline exports.
While there is hope Trump's headline-grabbing tariffs are part of a plan to take a harsh line as a bargaining tactic towards a deal with China.
However, top economic advisor to US, Larry Kudlow, suggested that taxes might not go into effect, warned on Friday that the announcements were not negotiating tactics. Meanwhile Treasury Secretary Steven Mnuchin said the White House hoped to negotiate but acknowledged a trade war was a possibility.
Trump during the outgoing weekend, tweeted that: “China will take down its trade barriers because it is the right thing to do.”
Eyes on Xi speech –
All three main indexes on Wall Street ended more than two percent down Friday.
However, markets in Asia swung at the start of this week, with Tokyo slightly higher by the break, Hong Kong up 0.5 percent and Seoul 0.2 percent higher.
But Shanghai dipped 0.3 percent and Singapore shed 0.8 percent while Sydney and Wellington were both flat.
“Focus this week will remain the trade issues between the US and China… as some people began to have an optimistic view on the outcome of the issue. It's getting harder to predict what will come next,” SBI Securities said in a commentary.
Investors will be keeping a close eye on comments Tuesday by Chinese President Xi Jinping at the Boao Forum — dubbed the Asia Davao — to see if he comments on the brewing row.
“This is the event of the week for traders, investors, and markets,” said Greg McKenna, chief market strategist at AxiTrader. “Will Xi crank the handle on rhetoric or will he strike a more conciliatory tone?”
Key Market Stats
Tokyo – Nikkei 225: UP 0.1 percent at 21,580.42 (break)
Hong Kong – Hang Seng: UP 0.5 percent at 29,983.12
Euro/dollar: DOWN at $1.2274 from $1.2281 at 2100 GMT on Friday
Dollar/yen: UP at 106.94 yen from 106.92
Pound/dollar: UP at $1.4094 from $1.4088
Oil – West Texas Intermediate: UP 18 cents at $62.24 per barrel
Oil – Brent North Sea: UP 23 cents at $67.34 per barrel
New York – Dow: DOWN 2.3 percent at 23,932.76 (close)
London – FTSE 100: DOWN 0.2 percent at 7,183.64 (close)
