HONG KONG (AFP) – Asian markets largely extended their losses yesterday despite Wall Street registering strong gains as investors remained on edge over escalating United States (US)-China trade tensions.
The losses in Asia came despite a gain of more than one per cent for US indices as Wall Street recovered from a multi-session losing streak that saw the Dow hit its lowest level this year.
Equities had tumbled on Monday after Beijing allowed the yuan to slide sharply against the dollar following US President Donald Trump’s announcement that he would impose 10 per cent tariffs on another USD300 billion in Chinese goods starting September 1.
But Beijing’s move to stabilise the yuan after it dropped below the key 7.0 per dollar threshold helped to ease fears of a currency war despite Washington formally branding China a “currency manipulator”.
“The move to strengthen the yuan calmed markets after a drop on Monday. Emerging markets got some breathing room and rebounded,” said Senior Market Analyst Edward Moya at OANDA.
But he warned that “trade war concerns remain very much front of mind… at this point more details and statements from both sides are needed to inject calm into a volatile market”.
Tokyo shed 0.3 per cent, Shanghai also dropped 0.3 per cent and Seoul lost 0.4 per cent.
But Hong Kong closed modestly higher, ending a week-long losing streak after spending much of the day in the red as investors remained tense over the US-China trade war.
Mumbai was flat after India’s central bank cut interest rates for the fourth time this year – in line with expectations – as New Delhi battles sluggish economic growth and record unemployment.
But other emerging markets saw gains, with Jakarta and Manila climbing more than one per cent.
European markets also rose in opening trade, with Frankfurt jumping 0.9 per cent, London winning 0.4 per cent and Paris up 0.5 per cent.
US-China trade tensions have risen sharply since last week following Trump’s latest tariffs announcement, which would subject virtually all of the USD660 billion in goods traded between the world’s two top economies to punitive duties.
The yuan’s slump fuelled speculation that Beijing was devaluing the currency to support exporters and offset the tariffs threat, infuriating Washington.
Multiple rounds of tit-for-tat tariffs between the two countries have already battered trade and raised fears for the health of the global economy.
Chinese and US negotiators are set to reconvene in Washington in early September for another round of talks after last week’s discussions in Shanghai, but expectations of a deal are low.