Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Asian shares falter as U.S.-China trade war, recession worries weigh

Stock MarketsAug 12, 2019 06:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Illustration photo of a Japan Yen note

By Marc Jones

LONDON (Reuters) - Yen and bond bulls charged on Monday while stocks struggled again, amid ongoing worries that a prolonged U.S.-China trade war and damaging Brexit could tip top economies into recession.

Early gains for Europe's main bourses had quickly disappeared and Wall Street futures were already in the red after Asia-Pacific had also finished lower overnight.

That was despite a more than 1% rally for Chinese stocks after the yuan had avoided further drama and financial regulators there had relaxed margin financing rules late on Friday.

Safety remained the name of the game. FX harbour, the Japanese yen, hit its highest in nearly a year and a half at 105.32 yen against the dollar and gained against the euro and Brexit-bruised British pound too.

"Risk indicators and global markets have become more shaky and the yen is reflecting those concerns, and safe-haven shelters like the yen and the Swiss franc should continue to benefit," said Commerzbank (DE:CBKG) currency strategist Esther Reichelt.

In bond markets, the demand for guaranteed income was also unrelenting. A rally in Italy's debt gave it an extra boost after Fitch kept country's rating steady despite the prospect of snap elections in the euro zone's third biggest economy now looming.

There were signs that League leader Matteo Salvini's call for those snap elections was facing mounting resistance from other parties whose support will be needed for the plan to succeed.

"Fitch kept Italy's rating unchanged and some market participants may be betting that a snap election could be delayed," said DZ Bank rates strategist Sebastian Fellechner, referring to the fall in yields.

Economists are also watching for a batch of global data this week. Goldman Sachs (NYSE:GS) became the latest to cut its U.S. growth forecast at the weekend, warning that a U.S. China trade deal now looked unlikely before the 2020 U.S. presidential election.

One week ago, China allowed the yuan to break through the key 7-per-dollar level for the first time since 2008, prompting Washington to label Beijing a currency manipulator and sparking market ructions.

The International Monetary Fund said on Friday that it stood by its assessment that the value of China's yuan was largely in line with economic fundamentals.

MIXED MESSAGES

On Friday, Wall Street snapped a three-day winning streak after U.S. President Donald Trump said Washington was continuing trade talks with Beijing, but that the U.S. was not going to make a deal for now.

Those comments helped to drive a late sell-off in a volatile session that saw the Dow Jones Industrial Average fall 0.34%, the S&P 500 lose 0.66% and the Nasdaq Composite drop 1%.

White House trade adviser Peter Navarro subsequently said that the United States was still planning to hold another round of trade talks with Chinese negotiators.

Wall Street futures were down 0.5%.

In commodities, oil prices dipped on growth and trade worries, having risen sharply on Friday on a drop in European inventories and production cuts by the Organization of the Petroleum Exporting Countries.

International benchmark Brent crude futures were at $58.16 a barrel by 0829 GMT, down 37 cents from their previous settlement.

U.S. West Texas Intermediate (WTI) futures were at $53.89 per barrel, down 61 cents from their last close.

Both benchmarks fell last week, with Brent losing more than 5% and WTI falling about 2%.

"The market is facing a buyers' strike," said Michael Tran, commodity strategist at RBC Capital Markets, noting the low level of investors' long positions betting on higher prices.

"Despite the laundry list of disruptions and additional barrels at risk, investor length is currently near a multi-year low."

Argentina's markets were ready for a slump too after voters soundly rejected President Mauricio Macri's austere economic policies in primary elections at the weekend, raising serious questions about his chances of re-election in October.

Argentina's 2028-maturing, euro-denominated government bond was down more than 11 cents in European trading, Tradeweb data showed.

Asian shares falter as U.S.-China trade war, recession worries weigh
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
Ng Zen ng
Ng Zen ng Aug 12, 2019 2:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Trade has been there for centuries. Mainly offline settlement. Just that now also use to online. So is a mix of offline and online to public. Countries still have to adapt learn and move on where is will becomes hardern
James Pattison
James Pattison Aug 12, 2019 12:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Asian markets are still not down... does this seem like fake news?
Ng Zen ng
Ng Zen ng Aug 12, 2019 12:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Trade war has akways been there for centuries.... :). Everyday we are trading, buying good values goods haha
kok ping wee
kok ping wee Aug 12, 2019 12:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Reuters has no better news headline to sell.
William Ormsby
William Ormsby Aug 11, 2019 11:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
trading action so far does seem strange considering all recent economic news while the obvious headwinds continue to come to light.
James Pattison
James Pattison Aug 11, 2019 10:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Doesnt seem that fhe shares of the asian markets are down at all right now... seems like the opposite
Gary Gee
TheGman Aug 11, 2019 10:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Reuters is good like that. probably had two versions of the article and published the wrong one.
Hanna Christin
Hanna Christin Aug 11, 2019 10:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
or maybe the market just changed direction after the article was published? doesn't that seem like a more logical explanation?!
Gary Gee
TheGman Aug 11, 2019 10:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yep, it usually does. Reuters likes to be first to publish, which is silly because publishing market directions before 10 am is poor reporting. should wait until noon before ya call it.
Hanna Christin
Hanna Christin Aug 11, 2019 10:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gary Gee  they update their stories throughout the trading session, if you look at the publication time
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email