Stocks slip on worries over Chinese outlook, Huawei probe

SINGAPORE (AP) — World markets were mostly lower yesterday on renewed concern over the outlook for China’s economy after some provinces lowered their growth targets for 2019. Traders also fear a reported US investigation of China’s Huawei could derail talks aimed at ending a trade war between the world’s two largest economies.

KEEPING SCORE

In Europe, Germany’s DAX fell 0.4 per cent at 10,885.03 and France’s CAC 40 retreated 0.2 per cent to 4,799.14. Britain’s FTSE 100 sank 0.4 per cent to 6,837.58. Wall Street was set for early losses, with Dow futures 0.3 per cent lower at 24,069.00. S&P 500 futures fell 0.4 per cent to 2,602.80.

ASIA’S DAY

Hong Kong’s Hang Seng dropped 0.5 per cent to 26,755.63 and the Shanghai Composite index lost 0.4 per cent to 2,559.64. Japan’s Nikkei 225 index edged 0.2 per cent lower to 20,402.27 while Australia’s S&P ASX 200 rose 0.3 per cent to 5,850.10. South Korea’s Kospi added 0.1 per cent to 2,107.06. Shares rose in Taiwan, Thailand and Indonesia but fell in Singapore.

A visitor stands in front of stock trading boards at a private stock market gallery in Kuala Lumpur, Malaysia yesterday. Asian shares were mostly higher yesterday after strong earnings reports lifted indexes on Wall Street. – AP

CHINESE GROWTH

On Wednesday, the Hong Kong newspaper South China Morning Post reported that eight Chinese provinces have lowered their growth targets for 2019. This is out of 12 provinces which have published their forecasts so far. According to the report, Henan, home to the world’s largest iPhone factory, now hopes for growth of 6.5 per cent, down from 7.5 per cent. Previous reports have claimed China intends to downgrade its growth target from around 6.5 per cent, to a range of 6 to 6.5 per cent. The government is due to release economic data for the last quarter of 2018 on Monday.

US-CHINA TENSIONS

A Wall Street Journal report, citing people familiar with the matter, said federal prosecutors were investigating China’s Huawei Technologies Ltd. for allegedly stealing trade secrets from American companies including T-Mobile. The report said the investigation resulted from several civil lawsuits against Huawei and an indictment could be issued soon. This revived worries over relations between the two countries as officials struggle to find a compromise ahead of the March 1 end of a moratorium on raising tariffs against each other’s exports. Negotiators from both countries recently held trade talks in Beijing and more high level negotiations are in the works.

ANALYST’S TAKE

Suggestions that the US is investigating Huawei “raise questions about whether trade optimism is premature and crucially, whether more fundamental and strategic tensions between the US and China induce a longer-term, slow-burn drag,” Vishnu Varathan of Mizuho Bank said in an interview.

BREXIT HURDLE

On Wednesday, British Prime Minister Theresa May survived a no-confidence vote by a narrow margin of 325 to 306. This comes after lawmakers rejected a deal she brokered for Britain’s exit from the European Union. May has said she will talk to opposition parties and other lawmakers to come up with a Plan B. Leaving the bloc without a deal on March 29 is expected to be damaging for the economy.

ENERGY

Benchmark US crude oil fell 28 cents to USD52.03 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 20 cents to settle at USD52.31 per barrel on Wednesday. Brent crude, the international standard, dropped 19 cents to USD61.13. It added 68 cents to USD61.32 a barrel in London.

CURRENCIES

The dollar fell to 108.83 yen from 109.13 yen late Wednesday. The euro rose to 1.1397 from 1.1394, while the British pound eased to 1.2872 from 1.2885.