Asian stocks ‘unstable’, yuan struggles
HONG KONG: Asian markets were mixed yesterday with early gains pared by continuing concerns about the brewing China-US trade war, while the yuan struggled to maintain momentum after the Chinese central bank moved to support the unit.
Traders started the day on an upbeat note, tracking their New York and European counterparts following recent painful losses.
The gains came as data on Friday showed that while the US economy saw a slowdown in jobs creation in July, the pace of hiring remained strong over the past three months.
The report also showed wage growth remained tepid, helping ease worries about an overheating economy.
The result provided some muchneeded cheer to markets, which brushed off a warning from Beijing that it would impose new tariffs on US$60 billion (RM244.7 billion) worth of US goods if Washington pushes ahead with levies on US$200 billion of Chinese imports.
However, while reports said unofficial talks have been held between Beijing and Washington, trade tensions continue to rise, with a top White House adviser calling China a bad bet and saying its economy – the world’s second biggest – was struggling.
By the end of trade yesterday Tokyo was 0.1% lower, reversing a morning rally, while Shanghai tumbled 1.3%. Seoul dipped 0.1%.
Hong Kong closed up 0.5% but well off the gains of more than 1% seen soon after the open.
Sydney added 0.6%, Singapore gained 0.8% and Taipei was 0.1% higher. Manila and Bangkok were flat while Jakarta jumped more than 1% despite an earthquake that rattled the island of Lombok and killed dozens of people.
“Caution about further escalation in US-China trade frictions is still strong,” Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.
The yuan’s early gains petered out, having made small gains Friday after the People’s Bank of China (PBoC) unveiled measures making it harder to bet against the currency, which has suffered steep losses in the past two months.
The unit, which is wallowing around lows not seen for more than a year, bounced back soon after the announcement. It extended the gains yesterday morning before going into reverse.
The bank’s measure was similar to a move when the currency went into freefall following a devaluation three years ago that rattled global markets.
However, analysts were lukewarm on the move. Some said it indicated Chinese leaders were growing increasingly worried about the unit’s depreciation.
“The yuan kept falling when China did this last time in 2015, so I don’t think the PBoC’s move will significantly change the market tone,” Hao Hong, chief strategist at Bocom International Holdings, told Bloomberg News. – AFP