Asian stocks rebound after Trump avoids reigniting trade war

BEIJING (AP) – Hong Kong’s stock market surged more than three per cent and other Asian markets rebounded yesterday after United States (US)President Donald Trump avoided reigniting a trade war with China amid tension over Hong Kong and the coronavirus pandemic.

Shanghai’s market benchmark gained more than two per cent and Tokyo was up nearly one per cent.

Global markets sank on Friday as investors waited for Trump’s response to Beijing’s security law on Hong Kong. In the end, Trump ended Hong Kong’s special trade status and suspended visas of some Chinese students but avoided pulling out of a truce in a tariff war with Beijing that weighs on global growth.

“Markets may draw hollow consolation that the US is treading carefully,” said Mizuho Bank in a report. However, it warned, relief may be “set to evaporate.”

Hong Kong’s Hang Seng index jumped 3.4 per cent to 23,750.20. The Shanghai Composite Index rose 2.1 per cent to 2,911.74 and the Nikkei 225 in Tokyo rose 0.8 per cent to 22,062.39.

Men wearing masks in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo. PHOTO: AP

The Kospi in Seoul added 1.7 per cent to 2,063.34 and Australia’s S&P-ASX 200 was 0.9 per cent higher at 5,805.80. India’s Sensex opened up three per cent at 33,386.32. Singapore gained 2.1 per cent and Bangkok rose 1 per cent.

Meanwhile, a monthly gauge of Chinese manufacturing issued by a business magazine, Caixin, edged up to a four-month high, but new export orders fell from an already low level in a sign of weak global demand.

Also yesterday, South Korea reported exports fell 23.7 per cent in May from a year earlier.

US-Chinese tension has weighed on investor optimism about the global economy’s recovery from its deepest slump since the 1930s.

As China and some European countries revive economic activity, stock markets have been regaining much of this year’s losses despite rising numbers of virus cases in the US, Brazil and some other countries.

On Friday, Wall Street’s benchmark S&P 500 index ended the week with a three per cent gain at 3,044.31 following a late-afternoon rally boosted by Trump’s news conference. The Dow Jones Industrial Average fell 0.1 per cent to 25,383.11. The Nasdaq composite, which is heavily weighted with technology stocks, climbed 1.3 per cent to 9,489.87.

Before the virus outbreak, the global economy already was under pressure from the US-Chinese dispute over Beijing’s technology ambitions and trade surplus.

The world’s two biggest traders had raised tariffs on billions of dollars of each other’s goods. They signed a truce in January but Trump has added to market jitters by threatening to pull out if China doesn’t buy more American goods. On Friday, Trump said Washington would begin eliminating agreements that gave Hong Kong privileges that China lacked, including exemption from some import controls.

That followed the ceremonial Chinese legislature’s endorsement of a security law for Hong Kong.

It is unclear how the decision might affect US companies in Hong Kong or the territory’s status as a finance and business centre. But business groups said the uncertainty over its status might hurt its attractiveness to foreign investors.

In energy markets, benchmark US crude lost 30 cent to USD35.19 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained USD1.78 on Friday to settle at USD35.49. Brent crude, used to price international oils, shed 29 cents to USD37.55 per barrel in London. The dollar declined to 107.55 yen from Friday’s 107.81. The euro retreated to USD1.1136 from USD1.1165.