World shares fall on doubts US shutdown deal will succeed

 

BANGKOK (AP) — Shares fell in Europe yesterday after Asian markets retreated from early gains on caution over China-United States (US) trade talks and over the ability of congressional negotiators to forge a government funding bill acceptable to President Donald Trump.

KEEPING SCORE

Germany’s DAX lost 0.3 per cent to 11,249.21 and the CAC 40 in France gave up 0.4 per cent to 4,907.13. The FTSE 100 in Britain was flat at 6,811.94. Wall Street looked set for a slow start to the week, with the future contract for the Dow Jones industrial average down 0.4 per cent to 24,590.00 and that for the S&P 500 also 0.4 per cent lower at 2,652.00.

TRADE TALKS LOOM

Talks aimed at resolving the impasse over Chinese technology ambitions and other issues are due to resume in Washington later in the week, led by the US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He. Analysts say there might be moves to trim China’s massive trade surplus with the US that could stave off further hikes in punitive tariffs imposed by both sides. However, they expect gaps to remain on key problems such as China’s blueprint for state-led development of leading technologies.

US GOVERNMENT RE-OPENS

There was muted reaction in US markets last Friday to news that Trump and congressional leaders had reached a deal to reopen the federal government for three weeks while talks continue over the president’s demands for money to build a wall along the US border with Mexico. Doubts that they can reach agreement deepened after Trump told the Wall Street Journal in an interview that chances the congressional negotiators can craft a deal he’d accept were “less than 50-50”.

A currency trader stands near the screens at the foreign exchange dealing room in Seoul, South Korea. – AP

ANALYSTS’ VIEWPOINT

“So the US government being ‘open’ again is a relief. But the greater challenge ahead is to prevent another shut-down come February 15 and to that end, headway in talks between Republicans and Democrats over the next three weeks is critical,” Mizuho Bank said in a commentary.

ASIA’S DAY

Japan’s Nikkei 225 stock index sank 0.6 per cent to 20,649.00. Hong Kong’s Hang Seng index was flat at 27,576.96 and the Shanghai Composite index declined 0.2 per cent to 2,596.98. The Kospi in South Korea was flat at 2,177.30 while India’s Sensex plunged 0.9 per cent to 35,712.04. Shares fell in Southeast Asia. Australia’s markets were closed for a national holiday.

JAPAN-ECONOMY

Shares fell in Tokyo as the parliament convened and Prime Minister Shinzo Abe laid out plans to cope with adverse factors such as a sales tax hike due in October and longer-term demographic trends. Finance Minister Taro Aso pledged to use “every policy tool at our disposal” as he sought support for a budget that includes USD18 billion in stimulus to counter an October 1 increase in the sales tax to 10 per cent from the current eight per cent.

ENERGY

US crude oil shed USD1.03 to USD52.66 per barrel in electronic trading on the New York Mercantile Exchange. It rose 1.1 per cent to settle at USD53.69 per barrel last Friday. Brent crude, used to price international oils, gave up USD1.14 to USD60.50 per barrel. It had gained 0.9 per cent last Friday to USD61.64 per barrel.

CURRENCIES

The dollar was trading at 109.41 yen, down from 109.55 yen on Friday. The euro strengthened to USD1.1408 from USD1.1409.