Asian mar­kets strug­gle as traders await cru­cial US stim­u­lus

The Pak Banker - - FRONT PAGE - HONG KONG -AFP

Asian stocks drifted with traders strug­gling to build on the pre­vi­ous day's broad ad­vance and a record lead from Wall Street, with con­fi­dence kept in check by on­go­ing China-US ten­sions and lack of move­ment on a new US stim­u­lus.

Tech­nol­ogy firms con­tin­ued to lead a rally in New York, send­ing the Nas­daq to yet an­other all-time high, while the S&P 500 closed just short of a record fin­ish as frus­trated in­vestors wait for Democrats and Re­pub­li­cans to ham­mer out a much-needed fi­nan­cial sup­port pack­age.

With law­mak­ers now in re­cess and both par­ties' con­ven­tions over the next two weeks, ob­servers warn the chances of any­thing be­ing agreed any time soon are slim.

The two are also at log­ger­heads over fund­ing for the US Postal Ser­vice, which is ex­pected to see an ex­cep­tional num­ber of mail-in bal­lots in Novem­ber's elec­tion, with Don­ald Trump look­ing to limit them over claims of pos­si­ble fraud. "A lot of in­vest­ment pro­fes­sion­als as well as re­tail in­vestors are on the side­lines par­tially be­cause they are wait­ing for this se­cond stim­u­lus pack­age," Erin Gibbs, pres­i­dent and chief in­vest­ment of­fi­cer at Gibbs Wealth Man­age­ment, said on Bloomberg TV.

"It's not a full-on risk-on en­vi­ron­ment just yet." But the stand-off is just one of a num­ber of is­sues nag­ging mar­kets, with China-US ten­sions con­tin­u­ing to sour.

In the lat­est salvo, the US ex­panded sanc­tions on tele­coms gi­ant Huawei to fur­ther limit its ac­cess to com­puter chips and other prod­ucts, with of­fi­cials say­ing the firm was us­ing sub­sidiaries to cir­cum­vent mea­sures in place to pre­vent ex­ports of Amer­i­can tech­nol­ogy.

Bei­jing had al­ready slammed Wash­ing­ton for us­ing "dig­i­tal gun­boat di­plo­macy" after Trump or­dered TikTok's Chi­nese owner ByteDance to sell its in­ter­est in the Mu­si­cal.ly app it bought and merged with TikTok.

Bei­jing and Wash­ing­ton are al­ready butting heads over a range of is­sues in­clud­ing Hong Kong and the coro­n­avirus. While there are con­cerns the rows could af­fect the su­per­pow­ers' re­cently signed trade pact, such fears have been played down by both sides.

"For the mo­ment, the fact the... trade deal re­mains in place, and will do while the two sides choose not to hold their six-month re­view that was to have taken place last week­end, is seen as over­rid­ing the build­ing ev­i­dence of a tech­nol­ogy cold war now un­der way," said Na­tional Aus­tralia Bank's Ray At­trill.

Asian mar­kets swung in and out of pos­i­tive ter­ri­tory through the day.

Hong Kong eased 0.3 per­cent and Tokyo dropped 0.2 per­cent, while Sin­ga­pore re­treated 0.4 per­cent and Taipei gave up 0.7 per­cent.

Seoul tum­bled more than two per­cent as South Korea saw a surge in new virus in­fec­tions, hav­ing man­aged to con­trol it for months. But Shang­hai and Mumbai rose, while Welling­ton jumped more than one per­cent again after the govern­ment de­layed New Zealand's gen­eral elec­tion by four weeks ow­ing to a new virus flare-up.

Manila was also up more than one per­cent as a lock­down in the cap­i­tal is eased, while there were also gains in Bangkok and Jakarta.

Syd­ney rose de­spite China launch­ing a probe Aus­tralia's wine ex­ports to in­ves­ti­gate dump­ing -- when a coun­try sells goods in a coun­try for less than it costs at home -through­out 2019, at the re­quest of the Wine

In­dus­try As­so­ci­a­tion of China.

How­ever, Trea­sury Wine Es­tates, which owns the Pen­folds brand, tum­bled more than 14 per­cent.

An­a­lysts said there was not too much con­cern on mar­kets about pos­si­ble tax hikes if Joe Bi­den beats Trump in the race for the White House.

"The Demo­cratic Con­ven­tion kicks off (Mon­day) and the theme should be that Bi­den will be good for the econ­omy," said Ed­ward Moya at OANDA.

"Wall Street seems con­vinced that Bi­den's tax pol­icy will not kill the stock mar­ket as sta­bil­ity in fight­ing the coro­n­avirus and a con­cil­ia­tory tone on trade will drive risk higher.

"A Bi­den pres­i­dency could of­fer greater cer­tainty and sta­bil­ity for the econ­omy."

In early trade, Lon­don, Paris Frank­furt were all in neg­a­tive ter­ri­tory.

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