Asian stocks mixed as trade tensions take center stage
Asian markets were mixed on Monday as concerns over trade tensions moved to the forefront at the meeting this weekend of the Group of 20 industrial nations.
KEEPING SCORE: Japan‘s Nikkei 225 tumbled 1.3 percent to 22,401.08 and South Korea‘s Kospi dropped 0.9 percent to 2,269.31. Hong Kong’s Hang Seng added 0.3 percent to 28,295.55. The Shanghai Composite Index gained 1.1 percent to 2,860.39, recouping Friday’s losses. Australia‘s S&P-ASX 200 fell 0.9 percent to 6,227.60.
WALL STREET: U.S. indexes closed slightly lower on Friday as a jump in bond yields helped banks but hurt big-dividend stocks. The S&P 500 index lost 0.1 percent to 2,801.83. The Dow Jones Industrial Average gave up less than 0.1 percent to 25,058.12. The Nasdaq composite dipped 0.1 percent to 7,820.20 while the Russell 2000 index of smaller-company stocks dropped 0.3 percent to 1,696.81.
G-20 CONCERNS: G-20 finance ministers and central bankers called Sunday for more dialogue on trade disputes that threaten global economic growth. Their communique said that although the global economy remains strong, growth is becoming “less synchronized” and risks over the short and medium term have increased. These include financial vulnerabilities, heightened trade and geopolitical tensions and global imbalances. “We … recognize the need to step up dialogue and actions to mitigate risks and enhance confidence,” the communique said.
TRUMP OFFENSIVE: On Friday, President Donald Trump took to Twitter to accuse the European Union and China of harming the U.S by manipulating their currencies and reducing interest rates. Speaking to CNBC, Trump renewed his threat to ultimately slap tariffs on a total of $500 billion of imports from China — roughly equal to all the goods Beijing ships annually to the United States. He shrugged off the prospect that a trade war with China could cause the stock market to tumble. “If it does, it does,” Trump said. Analysts say they’re becoming more convinced that Trump’s multi-front trade fights aren’t merely a short-term negotiating ploy. Rather, he may be prepared to wait for as long as he feels it’s necessary to force other countries to adopt trade rules more favorable to the United States.
ANALYST’S TAKE: “The hope is that this bluster is a negotiation tactic that will be watered down during negotiations but increasingly it looks difficult to duck trade blowback,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
CURRENCIES: The U.S. dollar fell sharply after Trump claimed countries were manipulating their currencies. It extended its losses on Monday, easing to 110.93 yen from 111.42 yen. The euro rose to $1.1728 from $1.1724.
OIL: Benchmark U.S. crude dropped 13 cents to $68.13 per barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract settled at $68.26 a barrel. Brent crude, used to price international oils, shed 12 cents to $72.95.