Asian shares slide after Trump's trade comments; China, Japan lead losses
In Tokyo, Nikkei 225 fell 1.18 percent, or 270.60 points, to close at 22,689.74 amid the move higher in the yen. The dollar slipped to trade at 110.22 at 3:27 p.m. HK/SIN, under the 111 handle seen earlier this week. Major exporters were hurt as the yen firmed, with Honda Motor declining 1.03 percent and TDK down 1.96 percent.
The broader Topix was lower by 0.68 percent, with losses seen in all but two of its 33 subindexes. Declines were led by the Topix mining and oil subindexes, which dropped 4.3 percent and 3.07 percent, respectively.
The Kospi erased early losses to edge up by 0.26 percent to 2,471.91 as gains in large cap technology names offset declines seen in other major sectors. Samsung Electronics rose 3.6 percent and SK Hynix added 6.96 percent, while steelmakers and financials slid.
|ASX 200||S&P/ASX 200||6032.50||-9.40||-0.16%|
|CNBC 100||CNBC 100 ASIA IDX||8632.02||-36.87||-0.43%|
Mainland stock indexes saw similar losses: The Shanghai composite dropped 1.4 percent to close at 3,169.24, its largest single-day fall in around a month, according to Reuters. The smaller Shenzhen composite slid 1.1 percent to end at 1,834.72.
Coal miners came under pressure, with shares of China Shenhua down 6.16 percent in Hong Kong by 3:32 p.m. HK/SIN and lower by 6.95 percent in Shanghai. That came as Chinese authorities intervened in the coal market, Reuters reported.
Over in Sydney, the S&P/ASX 200 slipped 0.16 percent to close at 6,032.50 as energy names dragged on the broader index. Meanwhile, MSCI's index of shares in Asia Pacific excluding Japan edged down by 0.6 percent in Asia afternoon trade.
Declines came after President Donald Trump said he was "not satisfied" with bilateral trade talks with China that occurred last week, but called them a "start" to working out the U.S. trade imbalance with Beijing. U.S. stocks closed lower following those comments despite starting the session on positive footing.
Still on the issue of trade, China announced on Tuesday that it would reduce tariffs on some vehicles to 15 percent from as much as 25 percent. Tariffs on certain automotive parts would also be cut.
Global stock markets had been buoyed earlier in the week by fading jitters over U.S.-China trade tensions after the two sides met in Washington for talks. U.S. Treasury Secretary Steven Mnuchin's comment that negotiations had made "very meaningful progress" saw the Dow Jones industrial average close above the 25,000 level on Monday for the first time since March.
On the geopolitical front, Trump said Tuesday there was a "substantial chance" that a summit with North Korean leader Kim Jong Un "may not work out." Trump's comments came as he met South Korean President Moon Jae-in ahead of a planned meeting, scheduled for June 12, with Kim.
In currencies, the dollar edged up against a basket of currencies ahead of minutes from the Federal Reserve which are expected during U.S. hours. The dollar index was firmer at 93.788, but still below a five-month high reached earlier in the week.
In corporate news, shares of Australia's Santos plunged 8.39 percent after the oil and gas producer rejected a takeover offer from Harbour Energy. The offer did not represent the full value of the company, Santos said in a release, adding that it had also ended discussions with Harbour.
European markets retreat amid Italian government uncertainty, trade jitters
Italy's FTSE MIB was among the top fallers among national indexes, down more than 1.3 percent as a sell-off in the country's government bonds resumed on Wednesday. Uncertainty over the creation of an anti-establishment government in Rome has prompted a sharp fall in the country's benchmark index.
Meanwhile, Germany's DAX index, which typically finds support amid currency weakness, slipped 1.47 percent.
Europe's basic resource stocks led the losses, down 2.47 percent amid elevated tensions in trade talks. The European Union's trade chief said Tuesday that the bloc's efforts to persuade Washington not to impose tariffs on imports of EU steel and aluminum appeared to have failed.
President Donald Trump has granted EU producers an exemption from import tariffs of 25 percent on steel and 10 percent on aluminum, depending on the outcome of talks. The exemption expires on June 1. Anglo American was the worst performer in the sector and the pan-European benchmark, down 5 percent.
Britain's Marks & Spencer surged towards the top of the index after it reported its latest figures on Wednesday. The 134-year-old company posted a second straight decline in annual profit and said it urgently had to modernize in order to not to risk fading away. Nonetheless, its shares rose over 5 percent as results were largely in line with expectations.
Trade talksOn Wall Street, stocks dropped after retail giant Target reported earnings that fell short of expectations and trade talks with China remained uncertain.
Trump said Tuesday he was not satisfied with recent negotiations between the U.S. and China. His comments followed remarks over the weekend from U.S. Treasury Secretary Steven Mnuchin who said Washington and Beijing's current trade dispute was "on hold."
The U.S. president also threatened to fine ZTE Corp and warned he might shake up its management, amid broader plans for the White House to roll back more severe penalties against the Chinese telecom company.
In data, sterling slumped to a fresh 2018 low on Wednesday after weaker-than-anticipated U.K. inflation cast doubt over whether the Bank of England would raise interest rates this year. Annual consumer price inflation slowed to 2.4 percent — its weakest level since March 2017.
Meanwhile, euro zone consumer confidence fell to 0.2 points in May from 0.3 points the previous month.
Stocks reverse losses, finish up after Fed minutes show willingness to let inflation run
The Dow Jones industrial average added 52.4 points to close at 24,886.81, led higher by gains in Boeing and McDonald's. The S&P 500 rose 0.3 percent to finish at 2,733.29 after a decline in interest rates accompanied a strong performance from utilities and real estate.
The Nasdaq composite added 0.6 percent to finish at 7,425.96 as Apple, Amazon, Facebook and Netflix led technology stock higher.
Fed officials said that they'd be comfortable allowing inflation to briefly run above its target as the economy continues to rebound, according to the central bank's May meeting minutes.
Specifically, the minutes said "a temporary period of inflation modestly above 2 percent would be consistent with the Committee's symmetric inflation objective."
Though the general tone was that inflation would continue to rise, there was disagreement over how confident the Fed should be after undershooting its target for so long, with some members amenable to letting the prices climb higher.
"The market was bracing for a hawkish tone to the meeting minutes and what they got was symmetric and balanced in terms of the language," said Michael Arone, chief investment strategist for State Street Global Advisors. "Stocks reacted well. Traditional defensive sectors, ones that have been negatively impacted by higher rates, are those that are leading the market today."
The Dow started the day down more than 100 points after retail giant Target reported earnings that missed expectations while trade talks with China remained uncertain after President Donald Trump said the current dealmaking may be "too hard to get done."
Uncertainty over the future of trade agreements between the United States and China has kept stocks on edge over the past two days. The president downplayed expectations for a deal Wednesday, suggesting a new direction for talks between the world's economic powerhouses.
"It's basically removing what we were given on Monday: that the enthusiasm that the Sino-American relationship was healing by the way of the U.S. and China agreeing on some format to solve the trade dispute," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Shares of industrial conglomerate General Electric fell 7.2 percent Wednesday — its worst one-day performance since 2009— after chief executive John Flannery said he expects no profit growth this year in its already stagnant power business.
Flannery declined to comment about whether the company would cut the company's dividend again in 2019.
"We have to see how this plays out," Flannery said to analysts at the annual Electrical Products Group conference in Florida, according to Reuters.
Globally, the Stoxx Europe 600 fell 1 percent while Japan's Nikkei 225 fell 1.18 percent, its largest one-day decline since March.
The reversal in stocks was accompanied by purchases of safe haven assets like bonds. The yield on the benchmark 10-year Treasury note, which moves inversely with its price, fell to 3.008 percent. The dollar index, which tracks the dollar against a basket of other currencies, was up 0.5 percent at 94.11.
"To me, the takeaway is that the Fed is getting us comfortable with the fact that their forecast could be above 2 percent," said Michael Materasso, co-chair of Franklin Templeton's fixed-income policy committee. "It goes to show you that this 2 percent line in the sand should not be a line in the sand, but should be more of a range."
Shares of Minneapolis-based Target sank more than 5.5 percent on Wednesday after it reported first-quarter earnings that missed analysts' expectations on both the top and bottom lines.
The company blamed poor spring weather for the disappointing performance as it works to remodel many of its locations.
"Those numbers were below expectations," said Dana Telsey, Telsey Advisory Group CEO. "The number of transactions accelerated from the fourth quarter, but with inventories being where they are, they had to mark down some goods ... They've got some ground to make up."
Home improvement retailer Lowe's also missed expectations for the first quarter, reporting a rise in sales of just 0.6 percent versus expectations of a 3 percent increase, according to Reuters.
Its stock, however, rose more than 10 percent after it maintained its annual financial targets and famed hedge fund manager Bill Ackman revealed a $1 billion stake in the company.
High-end jeweler Tiffany & Co., meanwhile, easily beat analysts' estimates. The company's stock rose more than 23 percent after reporting earning per share of $1.14 versus expectations of 83 cents. It also raised its full-year guidance in light of the solid beat.
The New York-based company suggested its comeback plan is working to retain price-conscious millennial shoppers from drifting to new competitors.
"Those comps are much better than expected ... Tiffany is getting new merchandise in their stores," Telsey added. "It's product, it's marketing, it's new engagement and I think that's what the new management team is bringing."