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Asian stock market losses mount amid fears over trade, oil and rates – business live Asian stock market losses mount amid fears over trade, oil and rates – business live
(35 minutes later)
We seem to have hit a fairly quiet spot in the trading day.
The ASX200 in Sydney is down around 1% and is due to close in a few minutes.
The Nikkei hasn’t moved from the -1.5% mark for a couple of hours. Ditto the Kospi (-0.5%) and the Hang Seng ( -0.1%). The CSI300 in Shanghai is probably the biggest mover, sliding from positive territory a couple of hours ago to now being off 0.8%.
Talking of China, it’s worth revisiting comments by the country’s central bank governor at the close of the IMF meeting in Bali on Sunday.Talking of China, it’s worth revisiting comments by the country’s central bank governor at the close of the IMF meeting in Bali on Sunday.
Yi Gang said China still had plenty of room for adjustment in interest rates and the reserve requirement ratio (RRR) in the face of any negative impact from trade tensions with the United States.Yi Gang said China still had plenty of room for adjustment in interest rates and the reserve requirement ratio (RRR) in the face of any negative impact from trade tensions with the United States.
He admitted China faced “tremendous uncertainties” but was seeking a “constructive solution” to the current trade tensions. “We still have plenty of monetary policy instruments in terms of interest rate policy, in terms of RRR. We have plenty of room for adjustment, just in case we need it,” Yi said, indicating that Beijing feels it has plenty of ammunition to fire up the economy if needed.He admitted China faced “tremendous uncertainties” but was seeking a “constructive solution” to the current trade tensions. “We still have plenty of monetary policy instruments in terms of interest rate policy, in terms of RRR. We have plenty of room for adjustment, just in case we need it,” Yi said, indicating that Beijing feels it has plenty of ammunition to fire up the economy if needed.
He added that he expected GDP to print at least 6.5% on Friday.He added that he expected GDP to print at least 6.5% on Friday.
Chris Weston of Pepperstone in Melbourne has weighed with some commentary, saying things could quite ugly on stock markets if data out of China – inflation, GDP and retail sales – disappoints later in the week.Chris Weston of Pepperstone in Melbourne has weighed with some commentary, saying things could quite ugly on stock markets if data out of China – inflation, GDP and retail sales – disappoints later in the week.
After last week’s volatility shock to markets, we start the week on a negative tone, with broad weakenss through Asia and the ASX 200 falling out of bed. The weekend news flow has centred on a lack of progress in the Brexit negotiations, a deterioration in Saudi/US relations, which have resulted in a 1.1% rally in crude, and the loss of majority for the CSU party in the German regional elections.After last week’s volatility shock to markets, we start the week on a negative tone, with broad weakenss through Asia and the ASX 200 falling out of bed. The weekend news flow has centred on a lack of progress in the Brexit negotiations, a deterioration in Saudi/US relations, which have resulted in a 1.1% rally in crude, and the loss of majority for the CSU party in the German regional elections.
Here are the latest scores, courtesy of IC Markets (although I think they’ve missed the minus sign off the Hang Seng price):Here are the latest scores, courtesy of IC Markets (although I think they’ve missed the minus sign off the Hang Seng price):
Asia UPDATE: #Nikkei 225 -1.50% #Hangseng 1.03%#KOSPI -0.47%#ASX200 -1.16%#SSEC -0.01%#STI -0.27%#EquitiesAsia UPDATE: #Nikkei 225 -1.50% #Hangseng 1.03%#KOSPI -0.47%#ASX200 -1.16%#SSEC -0.01%#STI -0.27%#Equities
Summing up nicely, Masayuki Kubota, chief strategist at Rakuten Securities says: “We can’t say the shock is over.”Summing up nicely, Masayuki Kubota, chief strategist at Rakuten Securities says: “We can’t say the shock is over.”
The pound is set for a volatile few days as the wrangling over Brexit intensifies ahead of the meeting of European leaders starting on Wednesday night. It sits at $1.31 at the moment after losing 0.3% today.The pound is set for a volatile few days as the wrangling over Brexit intensifies ahead of the meeting of European leaders starting on Wednesday night. It sits at $1.31 at the moment after losing 0.3% today.
The key issue is how to prevent a hard border between Northern Ireland and the Republic. The EU wants the North to remain essentially bound by EU customs rules but that is facing pushback from Brexiters. Theresa May is hoping a temporary “backstop” can be put in place where the whole country remains in the customs deal for the time being.The key issue is how to prevent a hard border between Northern Ireland and the Republic. The EU wants the North to remain essentially bound by EU customs rules but that is facing pushback from Brexiters. Theresa May is hoping a temporary “backstop” can be put in place where the whole country remains in the customs deal for the time being.
(There’s a good explainer here from Daniel Boffey, or Brussels correspondent.)(There’s a good explainer here from Daniel Boffey, or Brussels correspondent.)
Meanwhile, former foreign secretary and would-be Tory leader, Boris Johnson, has sounded off again in his Telegraph column. He says the backstop idea should be rejected completely and says the EU is treating the UK “with contempt”:Meanwhile, former foreign secretary and would-be Tory leader, Boris Johnson, has sounded off again in his Telegraph column. He says the backstop idea should be rejected completely and says the EU is treating the UK “with contempt”:
In presuming to change the constitutional arrangements of the United Kingdom, the EU is treating us with naked contempt. Like some chess player triumphantly forking our king and our queen, the EU commission is offering the UK government what appears to be a binary choice. It is a choice between the break-up of this country, or the subjugation of this country, between separation or submission.In presuming to change the constitutional arrangements of the United Kingdom, the EU is treating us with naked contempt. Like some chess player triumphantly forking our king and our queen, the EU commission is offering the UK government what appears to be a binary choice. It is a choice between the break-up of this country, or the subjugation of this country, between separation or submission.
So seems like a good moment to run this brilliant picture of UK foreign secretary Jeremy Hunt and other foreign ministers in the maze at his country retreat Chevening this weekend.So seems like a good moment to run this brilliant picture of UK foreign secretary Jeremy Hunt and other foreign ministers in the maze at his country retreat Chevening this weekend.
Still with Australia and interesting to note that Shane Oliver, the high-profile chief economist at AMP, has suggested that he might have to revise downwards his forecasts on house prices.Still with Australia and interesting to note that Shane Oliver, the high-profile chief economist at AMP, has suggested that he might have to revise downwards his forecasts on house prices.
He tweeted on Saturday that the auction results weren’t good but his forecast of a peak to trough fall of 15% out to 2020 remained in place. But he told the AFR that he might hve to rethink that forecast on the downside.He tweeted on Saturday that the auction results weren’t good but his forecast of a peak to trough fall of 15% out to 2020 remained in place. But he told the AFR that he might hve to rethink that forecast on the downside.
“The risks are skewing to greater than 5% declines per year, which is what I’ve been assuming,” he told the Financial Review on Sunday. “I am thinking about revising down again.”“The risks are skewing to greater than 5% declines per year, which is what I’ve been assuming,” he told the Financial Review on Sunday. “I am thinking about revising down again.”
...Domain auction clearances. Auction sales volumes running down 50% from year ago in both Sydney and Melbourne. All consistent with further falls in home prices ...our forecast remains for top to bottom falls of 15% out to 2020. Risk on downside. #ausecon pic.twitter.com/SY45iIYpzc...Domain auction clearances. Auction sales volumes running down 50% from year ago in both Sydney and Melbourne. All consistent with further falls in home prices ...our forecast remains for top to bottom falls of 15% out to 2020. Risk on downside. #ausecon pic.twitter.com/SY45iIYpzc
In Australia the ASX200 has had a torrid morning. At one point it was down more than 1.5% but it has recovered at bit and is now at 5,829, a fall of 66 points or 1.1%.In Australia the ASX200 has had a torrid morning. At one point it was down more than 1.5% but it has recovered at bit and is now at 5,829, a fall of 66 points or 1.1%.
The financial sector has been battered amid concern about the impact of the royal commission on the big four and the amount of compensation they will have to pay. Commonwealth is the worst performing, down more than 2%.The financial sector has been battered amid concern about the impact of the royal commission on the big four and the amount of compensation they will have to pay. Commonwealth is the worst performing, down more than 2%.
There’s also the question of the impact from a deteriorating housing market. According to the AFR this morning, less than half of properties at auction this weekend were sold. That’s a bad outcome during what should be one of the busiest times of the year. Agents are blaming lack of credit for buyers pulling out.There’s also the question of the impact from a deteriorating housing market. According to the AFR this morning, less than half of properties at auction this weekend were sold. That’s a bad outcome during what should be one of the busiest times of the year. Agents are blaming lack of credit for buyers pulling out.
Banks’ share prices have no floor. You have deteriorating housing market which will affect their balance sheets, rising interest rates will do the same. Banks’ share price essentially depends on how bad the bust will be in Oz housing, especially NSW, VIC and WA #ausbiz https://t.co/QFQiohosMyBanks’ share prices have no floor. You have deteriorating housing market which will affect their balance sheets, rising interest rates will do the same. Banks’ share price essentially depends on how bad the bust will be in Oz housing, especially NSW, VIC and WA #ausbiz https://t.co/QFQiohosMy
The Chinese trading day has kicked off.The Chinese trading day has kicked off.
The Hang Seng is down nearly 1% while the Shanghai Composite is up a fraction.The Hang Seng is down nearly 1% while the Shanghai Composite is up a fraction.
Another major factor in stock market losses this week has been the prospect of a full-blown US-China trade war. But calls for calm from leaders gathered at the IMF conference in Bali last week seem to have fallen on deaf ears.Another major factor in stock market losses this week has been the prospect of a full-blown US-China trade war. But calls for calm from leaders gathered at the IMF conference in Bali last week seem to have fallen on deaf ears.
The Chinese currency fell again against the dollar today. It’s now at 6.92. That is sure to rattle Washington where there is a widespread view that beijing manipulates the currency to benefit exporters.The Chinese currency fell again against the dollar today. It’s now at 6.92. That is sure to rattle Washington where there is a widespread view that beijing manipulates the currency to benefit exporters.
China is unlikely to let the yuan weaken past 7 per dollar any time soon, according to market observers https://t.co/1ENWIwgWuB pic.twitter.com/XIJjyL4jFuChina is unlikely to let the yuan weaken past 7 per dollar any time soon, according to market observers https://t.co/1ENWIwgWuB pic.twitter.com/XIJjyL4jFu
In Sunday’s IMF communique, members agreed to debate ways to improve the World Trade Organization so it can better address trade disputes and that countries would “refrain from competitive devaluations and will not target our exchange rates for competitive purposes”.In Sunday’s IMF communique, members agreed to debate ways to improve the World Trade Organization so it can better address trade disputes and that countries would “refrain from competitive devaluations and will not target our exchange rates for competitive purposes”.
The latter point address concern that China will allow the yuan to depreciate in order to make its exports more competitive to cope with any downside from US tariffs. Hmm ...The latter point address concern that China will allow the yuan to depreciate in order to make its exports more competitive to cope with any downside from US tariffs. Hmm ...
While the Ssudi government has come out fighting on the prospect of US sanctions in the Khashoggi case, the boss of the Saudi-owned Al-Arabiya satellite news network has gone a few steps further.While the Ssudi government has come out fighting on the prospect of US sanctions in the Khashoggi case, the boss of the Saudi-owned Al-Arabiya satellite news network has gone a few steps further.
Turki Aldakhil paints an apocalyptic picture of world affairs if the US tries to get tough on the Saudis. He says the kingdom would respond by slashing oil output and would team up with Russia and stop buying US arms. The US would be “stabbing itself to death”.Turki Aldakhil paints an apocalyptic picture of world affairs if the US tries to get tough on the Saudis. He says the kingdom would respond by slashing oil output and would team up with Russia and stop buying US arms. The US would be “stabbing itself to death”.
Imposing any type of sanctions on Saudi Arabia by the West will cause the kingdom to resort to other options, US President Donald Trump had said a few days ago, and that Russia and China are ready to fulfill Riyadh’s military needs among others. No one can deny that repercussions of these sanctions will include a Russian military base in Tabuk, northwest of Saudi Arabia, in the heated four corners of Syria, Israel, Lebanon and Iraq.Imposing any type of sanctions on Saudi Arabia by the West will cause the kingdom to resort to other options, US President Donald Trump had said a few days ago, and that Russia and China are ready to fulfill Riyadh’s military needs among others. No one can deny that repercussions of these sanctions will include a Russian military base in Tabuk, northwest of Saudi Arabia, in the heated four corners of Syria, Israel, Lebanon and Iraq.
At a time where Hamas and Hezbollah have turned from enemies into friends, getting this close to Russia will lead to a closeness to Iran and maybe even a reconciliation with it.At a time where Hamas and Hezbollah have turned from enemies into friends, getting this close to Russia will lead to a closeness to Iran and maybe even a reconciliation with it.
The list of marquee speakers at the Future Investment Intiative conference in Saudi Arabia next week makes interesting reading because a few of them have now said they will not be going.The list of marquee speakers at the Future Investment Intiative conference in Saudi Arabia next week makes interesting reading because a few of them have now said they will not be going.
Jamie Dimon has pulled out along with the boss of Uber and the editor of the Economist, Zanny Minton-Beddoes, while US treasury secretary Steve Mnuchin is under pressure not to go. Watch this space for more.Jamie Dimon has pulled out along with the boss of Uber and the editor of the Economist, Zanny Minton-Beddoes, while US treasury secretary Steve Mnuchin is under pressure not to go. Watch this space for more.
The rise in oil prices is gathering pace too.The rise in oil prices is gathering pace too.
Brent futures are up 1.3% to $81.54 a barrel.Brent futures are up 1.3% to $81.54 a barrel.