Asian markets broadly fall as trade worries persist
Asian markets were muted on Thursday as anxiety over the state of US-China trade talks continues.
Hong Kong’s Hang Seng Index fell 0.3%, while China’s Shanghai Composite Index inched down 0.1%. Japan’s Nikkei also dipped 0.1%, while and South Korea’s Kospi lost 0.4%.
US-China trade relations continue to worry investors. The two countries have announced tariffs on each other that are set to go into effect on Sunday.
And although US Treasury Secretary Steven Mnuchin insisted to Bloomberg that a meeting with China on trade will still happen, he did not specify when.
Uncertainties about trade still haunt the market, which has created a “waiting game,” wrote Jingyi Pan, a strategist for IG Group, in a research note.
The yuan weakened further, despite a stronger-than-expected fixing by the Chinese central bank. The currency has slumped 4% so far in onshore trading this month. On Thursday, it was trading at about 7.16 per one US dollar. In the offshore market, where the currency moves more freely, it was trading at 7.17 per dollar. It has fallen 3.8% so far this month outside of China.
The fixing rate is a band that China’s central bank sets every day to limit how much the yuan’s value can change. But Thursday’s “strong” fix isn’t enough to boost the currency on its own, according to Ken Cheung, chief foreign exchange strategist for Asia at Mizuho Bank in Hong Kong. He suggested in a research note that the central bank might have to take stronger action to stabilize the currency.
“Of course reviving hopes for China-US trade talks will also convince” markets that China’s policymakers want to stabilize the yuan exchange rate, he added.
Here are some other moves to look out for in Asia at 3 p.m. Hong Kong time:
- Bank of Japan board member Hitoshi Suzuki cautioned on Thursday that super-low interest rates can be a bad thing. He said during a speech that such measures can make financial institutions more vulnerable and hurt the economy. Japan’s interest rates are already very low, and investors are looking out to see whether the central bank will ease its monetary policy even further in the future.
- South Korean’s business confidence outlook rose slightly for September, according to a business survey index released by the Bank of Korea on Thursday. But it was still below the benchmark of 100, which means those pessimistic about the economic situation outnumber the optimists. The country’s central bank will hold a policy meeting Friday.
- South Korea on Thursday proposed a record budget plan of 513.5 trillion won ($423.5 billion) for next year in response to economic risks, according to the Korean Yonhap News Agency. The country also has its own trade tensions with Japan, which removed South Korea from its list of favored trade partners Wednesday.
- The Japanese yen, a traditional safe-haven currency, gained strength. It traded at 105.88 per one US dollar, slightly stronger compared to the previous session.