Asian mar­kets sink with Wall St, amid con­fu­sion

The Phnom Penh Post - - BUSINESS -

ASIAN mar­kets fell on Wed­nes­day fol­low­ing a rout on Wall Street, as in­vestors were bom­barded by a “per­fect storm” of prob­lems that erased the pos­i­tiv­ity seen at the start of the week.

The glum mood over­shad­owed hints from US Pres­i­dent Don­ald Trump at more time to re­solve the China-US trade row, as well as sooth­ing com­ments from China about their de­sire to push on with a week­end agree­ment be­tween the world’s top economies.

Trad­ing floors are awash with uncer­tainty over the agree­ment Trump ham­mered out with Chi­nese Pres­i­dent Xi Jin­ping to much fan­fare – and an ini­tial mar­ket rally – in Buenos Aires, with lit­tle clar­ity emerg­ing and the US pres­i­dent shift­ing his tone.

While he hailed the deal at first, on Tues­day he warned on Twit­ter “re­mem­ber, I am a Tar­iff Man”, adding “When peo­ple or coun­tries come in to raid the great wealth of our Na­tion, I want them to pay for the priv­i­lege of do­ing so”.

Then, in an­other tweet he left open the door to an ex­ten­sion of the agree­ment’s 90-day time­line to end the row.

On Wed­nes­day China’s com­merce min­istry called the pact “suc­cess­ful” and said it “will start with the im­ple­men­ta­tion of the spe­cific mat­ters in which con­sen­sus has been reached, the sooner the bet­ter”, with­out pro­vid­ing more de­tails.

Mount­ing risks

Adding to the mount­ing risks are con­cerns about the US econ­omy af­ter the dif­fer­ence in yields on two- and 10-year bonds nar­rowed, sug­gest­ing traders are in­creas­ingly con­cerned about longer-term prospects.

There are fears of an “in­ver­sion” where short-term yields over­take long-term rates, which in the past has been the pre­cur­sor to a re­ces­sion.

Wall Street suf­fered a bat­ter­ing, with the Dow slip­ping 3.1 per cent, S&P 500 3.2 per cent lower and Nas­daq 3.8 per cent off.

The sell­ing con­tin­ued into Asia, where Hong Kong plunged 1.7 per cent in the af­ter­noon, Shang­hai ended 0.6 per cent lower and Tokyo was down 0.5 per cent.

Sin­ga­pore shed 0.8 per cent and Seoul was 0.6 per cent off, while Welling­ton dived one per cent. Syd­ney slipped 0.8 per cent af­ter data showed the Aus­tralian econ­omy grew at a slower pace than ex­pected in July-Septem­ber. The Aus­tralian dol­lar dived more than one per cent.

The sell­ing “has all the nasty hall­marks that traders typ­i­cally call the per­fect storm,” said Stephen Innes, head of Asi­a­Pa­cific trade at Oanda. He said in­vestors “are prob­a­bly left feel­ing duped, tricked and maybe even snook­ered by some ill-ad­vised back­slap­ping com­ments post-G20”.

“While trade war is cer­tainly the num­ber one driver of global risk sen­ti­ment, the cur­rent melt­down is mor­ph­ing into a Hy­dra with fa­mil­iar points of ir­ri­ta­tion – trade, [Fed­eral Re­serve], Brexit, Italy, global growth – com­ing to a head,” he added.

On cur­rency mar­kets the pound con­tin­ued to strug­gle on con­cerns that Bri­tain could be head­ing for the EU exit with­out a deal, which most ob­servers fear could ham­mer the econ­omy.

Ster­ling briefly hit a 17-month low of $1.2659 af­ter Prime Min­is­ter Theresa May suf­fered stun­ning de­feats in par­lia­ment that high­lighted the up­hill fight she has in push­ing through her con­tro­ver­sial Brexit deal.

If she loses there are ex­pec­ta­tions she will face a no-con­fi­dence vote and pos­si­ble de­feat that could force early elec­tions and leave the coun­try in chaos.

Oil prices were also down more than one per cent – drag- ging re­gional en­ergy firms – af­ter an­other jump in US in­ven­to­ries came as Saudi Ara­bia raised ques­tions about the chances of an out­put cut at a meet­ing of Opec and non-Opec mem­bers at the week­end.

En­ergy Min­is­ter Khalid alFalih said it was “pre­ma­ture to say what will hap­pen” in Vi­enna, days af­ter Rus­sian Pres­i­dent Vladimir Putin had said the two ma­jor pro­duc­ers had agreed to a cap to sup­port prices.

“We need to get to­gether and lis­ten to our col­leagues, hear about their views on sup­ply and de­mand and their pro­jec­tions of their own coun­tries’ pro­duc­tion,” he said.

Crude had surged on Mon­day and Tues­day af­ter Putin’s com­ments.

“It’s not a good price sig­nal,” Bob Yawger, di­rec­tor of fu­tures at Mizuho Se­cu­ri­ties USA, told Bloomberg News. “Ei­ther de­mand is bad or all the talk about cut­ting pro­duc­tion is just lip ser­vice.”

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