Asia stocks choppy as trade war fears dominate markets

Asian markets were jittery yesterday as a volatile week marked by lingering worries over the US-China trade war and its impact on the world economy drew to a close.

Fears of a global recession and a drawn-out trade spat between the world’s top two economies saw the Dow suffer its worst one-day fall of the year on Wednesday.

Although US equities recovered slightly on Thursday, reassured by strong US retail sales and Walmart earnings, investors remained anxious, seeking out safe havens in the form of Treasury assets and gold, which continued to hover above the $1,500 level.

The yield on the 10-year US Treasury bond slid Wednesday below the yield on the two-year note, meaning the short-term interest rates were higher than the longer-term rates.

The so-called “inversion” phenomenon has been a reliable harbinger of recession for decades since it suggests that markets have a negative long-term outlook.

On Thursday the yield on the 30-year bond hit an all-time low, while the 10-year note plunged to its lowest     level in three years before staging a tepid recovery.

“Better-than-expected US data probably helped sentiment in US stock markets, though it seems to have been largely ignored by the bond market,” said Stephen Innes, managing partner at VM Markets.

In Asia, markets struggled to eke out marginal gains. Hong Kong was a bright spot, rising 0.9 per cent while Shanghai edged up 0.3 per cent. Tokyo and Sydney were flat while Seoul shed 0.6 per cent.

Eurozone stocks rebounded Friday morning, with Frankfurt climbing one percent and Paris climbing 0.8 per cent. The opening of London’s benchmark FTSE 100 index was delayed due to a “trading” issue according to its operator.

Economists have warned for months that trade tensions would drag down sentiment, which was already suffering due to China’s economic

slowdown and fears of Brexit’s impact on Britain and Europe.

The tensions have already hit global demand, with data this week showing China’s industrial output had plummeted to a 17-year low.

“There remains no end in sight” to the trade frictions, Tapas Strickland, senior analyst at National Australia Bank, said in a commentary.

“It is clear that China is willing to play the long game, meaning that to de-escalate tensions, any compromise will have to come from the US side,” he said, citing an editorial from China’s state-controlled media The Global Times.

 

Asia stocks choppy as trade war fears dominate markets

Asian markets were jittery yesterday as a volatile week marked by lingering worries over the US-China trade war and its impact on the world economy drew to a close. Fears of a global recession and a drawn-out trade spat between the worlds top two economies saw the Dow suffer its worst one-day fall of the year on Wednesday. Although US equities recovered slightly on Thursday, reassured by strong US retail sales and Walmart earnings, investors remained anxious, seeking out safe havens in the form of Treasury assets and gold, which continued to hover above the $1,500 level. The yield on the 10-year US Treasury bond slid Wednesday below the yield on the two-year note, meaning the short-term interest rates were higher than the longer-term rates. The so-called inversion phenomenon has been a reliable harbinger of recession for decades since it suggests that markets have a negative long-term outlook. On Thursday the yield on the 30-year bond hit an all-time low, while the 10-year note plunged to its lowest level in three years before staging a tepid recovery. Better-than-expected US data probably helped sentiment in US stock markets, though it seems to have been largely ignored by the bond market, said Stephen Innes, managing partner at VM Markets. In Asia, markets struggled to eke out marginal gains. Hong Kong was a bright spot, rising 0.9 per cent while Shanghai edged up 0.3 per cent. Tokyo and Sydney were flat while Seoul shed 0.6 per cent. Eurozone stocks rebounded Friday morning, with Frankfurt climbing one percent and Paris climbing 0.8 per cent. The opening of Londons benchmark FTSE 100 index was delayed due to a trading issue according to its operator. Economists have warned for months that trade tensions would drag down sentiment, which was already suffering due to Chinas economic slowdown and fears of Brexits impact on Britain and Europe. The tensions have already hit global demand, with data this week showing Chinas industrial output had plummeted to a 17-year low. There remains no end in sight to the trade frictions, Tapas Strickland, senior analyst at National Australia Bank, said in a commentary. It is clear that China is willing to play the long game, meaning that to de-escalate tensions, any compromise will have to come from the US side, he said, citing an editorial from Chinas state-controlled media The Global Times.