Asian stocks follow Wall Street lower on trade worries

BEIJING (AP) – Asian stock markets followed Wall Street lower after United States (US) President Donald Trump cast doubt over the potential for a trade deal with China this year.

Benchmarks in Tokyo, Hong Kong and Sydney fell more than one per cent while Shanghai and South Korea also retreated.

Trump said he has “no deadline” for a trade deal and doesn’t mind waiting until after next year’s presidential election to make one. Investors had hoped for at least enough progress to stave off new US tariffs on Chinese goods, including smartphones and laptops, scheduled to start December 15.

Tensions flared last week after Trump signed legislation expressing US support for pro-democracy demonstrators in Hong Kong.

“Until both sides dial down their hawkish rhetoric, markets will continue to pull back earlier optimism,” said DBS Group analysts in a report. “Trade war will be the key driver of sentiment in the immediate few weeks.”

Tokyo’s Nikkei 225 index sank 1.03 per cent to 23,141.68 and Hong Kong’s Hang Seng gave up 1.2 per cent to 26,077.77.

The Shanghai Composite Index retreated 0.3 per cent to 2,874.88 and Seoul’s Kospi declined 0.8 per cent to 2,060.81. Australia’s S&P-ASX 200 fell 1.4 per cent to 6,621.40 and benchmarks in Taiwan, New Zealand and Southeast Asia also retreated.

India’s Sensex bucked the trend, opening up 0.1 per cent to 40,724.00.

On Wall Street, the benchmark S&P 500 index fell 0.7 per cent to 3,093.20. The Dow Jones Industrial Average lost one per cent to 27,502.81. The Nasdaq dropped 0.6 per cent to 8,520.64.

Negotiators have yet to agree on details of an interim deal Trump has called “Phase 1”. Investors also are weighing the potential for additional trade disputes.

On Tuesday, Trump proposed tariffs on USD2.4 billion in French products in retaliation for a tax on global tech giants including Google, Amazon and Facebook. That follows a threat on Monday to raise tariffs on steel and aluminium from Argentina and Brazil.

Also yesterday, Australia disappointed investors by reporting third-quarter economic growth declined to 0.4 per cent over the previous quarter from 0.6 per cent in the three months ending in June. The Australian central bank had described the economy as experiencing a “gentle upturn”.

ENERGY: Benchmark US crude rose 42 cents to USD56.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 14 cents on Tuesday to close at USD56.10. Brent crude, used to price international oils, rose 49 cents to USD61.31 per barrel in London. It lost 10 cents the previous session to USD60.82.

CURRENCY: The dollar declined to JPY108.58 from Tuesday’s JPY108.63. The euro edged down to USD1.1077 from USD1.1084.