Asia Minute: Trade and Politics Influencing China Policy

Asia Minute: Trade and Politics Influencing China Policy

Asian shares were mixed Thursday following broad gains on Wall Street as investors pondered mixed reports on the likelihood of progress in resolving the trade war between the US and China. Australia's S&P/ASX 200 lost almost 0.1% to 6,543.40, while South Korea's Kospi lost 0.8% to 2,029.23. Tech was the best-performing sector in the S&P 500, gaining more than 1%. Shares fell in Singapore and Thailand bur rose in Jakarta.

Tech stocks led Wall Street into the black on Wednesday, capping a three-day losing streak as a report that China was open to a partial deal heartened investors ahead of high-level trade negotiations. "The recent blacklist and sanctions from the United States is just another usual tactic to showcase that it has multiple tools in the trade negotiations in line with Trump's maximum pressure policy". On Sept. 1, Washington hit Beijing with a 15% levy on $112 billion worth of those items.

Global equity markets tumbled and the safe haven yen and Swiss franc gained in early Asian trade on Thursday, on signs that Washington and Beijing still have a long way to go on resolving trade issues, with little progress made in deputy-level talks.

S&P 500 futures rose 0.9 per cent on the news and the offshore yuan extended gains.

About 20 minutes into trading, the Dow Jones Industrial Average was up 0.5 per cent at 26,296.68. The Nasdaq picked up 1% to 7,903.74 and the Russell 2000 index of smaller company stocks added 0.5%, to 1,479.46. But that conflict, which over the last 18 months has broadened to other contentious areas such as technology, state subsidies, human rights, Taiwan and the Hong Kong protests, is also damaging to the economy, as it cuts demand for Chinese exports, damages business confidence and undermines investment.

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US stock futures, in early trading Wednesday evening, declined sharply.

The tit-for-tat tariffs have driven down commerce, with Chinese exports down 9% in the first eight months of this year, and imports from the USA falling nearly 28% for the same period.

The Chinese insist they came in good faith and while they are making soybean and wheat purchases, at larger volumes than expected, the US will not agree to the suspension of tariffs which shows a lack of sincerity.

The November crude contract was down four cents at US$52.59 per barrel and the November natural gas contract was down 5.4 cents at US$2.23 per mmBTU. Brent crude oil, the global standard, rose 8 cents to close at $58.32 a barrel.

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