Trade uncertainty and Hong Kong unrest hit Asian stocks

Andia Rispah
  • November 13th 2019, 13:06
  • Last Updated: November 13th 2019, 13:33
  • Unclear direction over U.S-China trade talks and intensifying Hong Kong unrest hit Asian stocks
  • The U.S-China standoff has affected global financial markets and raised the risk of recession for some economies amid the slowing global trade.
  • Lack of substantial information is starting to unsettle investors in equities and other riskier assets.

Unclear progress over U.S-China trade talks and intensifying unrest in Hong Kong hit Asian stocks.

MSCI’s broadest index of Asian-Pacific shares outside Japan dropped 1.03% to its lowest in more than a week. 

The USD drifted in Asia after President Trump said a trade deal was close but failed to give specific timelines. He disappointed investors who expected him to touch his administration’s economic policies.

Trump further rattled investors when he threatened to impose even more tariffs if they do not sign a deal.

Diminishing prospects for a resolution to a long-standing trade deal suggested less demand for energy in the future. The signal of a lesser demand caused oil prices to fall.

Recently, the expectation of the U.S-China trade deal this month has been an essential factor in supporting stocks and riskier assets. But, the lack of substantial progress on the agreement has increased whether the agreement will even take place.

“I’m absolutely concerned. The clock is ticking,” Michael McCarthy, said.

“Markets are now expecting substantial progress in the next week or so, and if not, then confidence could crumble. There are diverging interpretations of Trump’s comments. I tend to go with commodities like oil and copper because they are plugged into global demand, so their fall is significant.” McCarthy added.

Michael McCarthy is the chief market strategist at CMC Markets in Sydney.

Hong Kong shares also dropped 2% to a four-week low, following fears that anti-government protests could spiral out of control.

Euro Stoxx 50 futures in the Pan-region dropped 0.57%. The German DAX futures were down 0.58%, and FTSE futures went down 0.54%.

The U.S.A and China have imposed tariffs on each other’s goods in a bitter dispute over China’s trade practices, which Trump perceives as unfair.

The standoff has affected global financial markets and raised the risk of recession for some economies amid the slowing global trade.

Trade deal uncertainty starting to unsettle investors in equities and other riskier assets

Recently, both sides have indicated progress towards rolling back some tariffs. But, the lack of substantial information is starting to unsettle investors in equities and other riskier assets.

Trump’s comments about the possibility of raising tariffs if the two sides would not reach an agreement have caused more friction. 

Yuan, the offshore spot, fell to a low of 7.0270 per dollar at one point in the morning trade. It was the weakest level since Nov.5, being hurt by the U.S-China trade wars.

Hong Kong stocks fell as protestors planned to paralyze parts of the Asian financial hub for the third day. Transport, businesses, and schools have closed after unrest escalated across the city.

Hong Kong, the former British colony, has been protesting against the Chinese rule for nearly five months now. Concerns are growing that chances of Chinese crackdown are rising.

Chinese shares dropped 0.18%, and Japanese shares also fell 0.76%

About the author

Andia Rispah
Andia Rispah
Andia Rispah is a Personal Finance & Investment Writer who helps Financial Advisors to create valuable content to help their clients make smarter financial investments. I use my industry experience to write content that builds awareness, trust and turns readers into raving fans.

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