Asia markets mixed as investors worry over US-China trade tensions
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.67% in the afternoon.
Mainland Chinese markets were mixed: The Shanghai composite closed flat while the Shenzhen composite fell 0.48%.
Hong Kong’s Hang Seng index added about 0.4% in late afternoon trade.
In Japan, the benchmark Nikkei 225 fell 0.16% to 21,117.22 while the Topix index was fractionally higher at 1,541.21. South Korea’s Kospi fell 0.69% to 2,045.31.
Australia’s ASX 200 declined 0.55% to 6,456, with the financial subindex down 0.45%.
Asia-Pacific Market Indexes Chart
The ANZ analysts pointed out that since both sides “will only negotiate on their own terms, it could be years before the two powers can find sufficient common ground.”
Both Beijing and Washington have imposed tariffs on billions of dollars’ worth of one another’s goods since last year. The trade tensions have battered financial markets and dampened business sentiment. The situation escalated earlier this month as both sides hiked tariffs on their goods.
Overnight, U.S. stocks fell as investors were concerned the trade war may last much longer than anticipated. Data also showed that manufacturing activity in the world’s largest economy grew at its slowest pace since September 2009 this month.
In India, Prime Minister Narendra Modi and his Bharatiya Janata Party clinched a landslide re-election victory. On Thursday, as Modi’s party led the vote count, investors had cheered — at one point, the Nifty 50 jumped above the 12,000 mark while the Sensex breached the 40,000 level. Both indexes ultimately gave up gains and closed lower.
On Friday, the Nifty 50 was up 0.77% while the Sensex added 0.78%.
Elsewhere, the dollar index, which measures the greenback against a basket of its peers, last traded at 97.696, falling from an earlier high of 97.906.
The Japanese yen, considered a safe haven currency, traded at 109.53 to the dollar, strengthening from levels beyond 110.40 earlier in the week. Meanwhile, the Australian dollar changed hands at $0.6896, gaining slightly from levels below $0.6880.
Oil prices jumped during Asia trading hours, bouncing back after losses on Thursday. Brent crude futures jumped 0.99% to $68.43 per barrel, and U.S. crude futures soared about 1.11% to $58.55 per barrel.
— Correction: This article has been updated to reflect that the Shanghai composite closed near
European stocks close higher as trade jitters fade; UK PM resigns amid Brexit crisis
European Markets: FTSE, GDAXI, FCHI, IBEX
That marked a contrast with Thursday’s session, in which European equities dropped sharply on the back of trade jitters.
President Donald Trump signaled Thursday that a trade deal with China could lift tough restrictions on the Chinese telecom giant Huawei. “If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal,” Trump said to White House reporters. He also predicted a swift end to the ongoing trade tensions.
CNH Industrial also led the gains, with its stock up close to 3% on the back of a share buyback announcement.
In corporate news, Moeller Maersk shares initially rose after first-quarter results, but turned south after the Danish shipping giant warned trade tensions were slowing growth in the global freight industry. The stock slipped almost 3%.
Meanwhile, U.K.-based retailer B&M also fell despite reporting an 8.7% increase in profit on Thursday. Concern around the company’s German business and weak sales in its homeware department dented shares, The Times reported. The stock was off by nearly 4%.
On Wall Street, the Dow Jones Industrial Average jumped more than 100 points, signaling investor fears over the trade dispute had been allayed by President Trump’s comments. The S&P 500 and Nasdaq Composite indexes were also in positive territory.
Prime Minister Theresa May announced on Friday that she would resign as party leader on June 7, making way for a new PM to continue Brexit negotiations with the EU. Sterling trimmed losses seen in Thursday’s session, last changing hands at $1.2688.
Dow rises nearly 100 points, but posts longest weekly losing streak since 2011
The Dow Jones Industrial Average ended the day up 95.22 points at 25,585.69 while the S&P 500 climbed 0.1% to 2,826.06. The Nasdaq Composite rose 0.1% at 7,637.01. The indexes rebounded slightly from sharp losses on Thursday after President Donald Trump said Thursday afternoon the ongoing trade war could be over quickly.
“We still think the negotiators are going to reach a deal, but it’s clearly going to take a lot longer and be more difficult than investors thought a few weeks ago,” said Kate Warne, investment strategist at Edward Jones. “But any glimmer of hope that progress is being made will help stocks rebound.”
But Friday’s gains were not enough to offset this week’s losses. The Dow dropped 0.7% this week to post its fifth consecutive weekly decline, its longest streak since 2011. The S&P 500 and Nasdaq fell a third straight week of losses, their longest slide since December 2018. The weekly losses come at a time when investors are growing more convinced that the trade war will take longer than expected to conclude and could hurt the economy.
U.S. durable goods orders dropped 2.1% last month amid a slowdown in exports and a buildup in inventories. This is the latest economic data set showing cracks in the economy while the world’s largest economies engage in a trade war. IHS Markit said Thursday that U.S. manufacturing activity fell to a nine-year low.
Spencer Platt | Getty Images
“It seems, for the moment, [trade] is the only thing investors are thinking about,” said Mike Bailey, director of research at FBB Capital Partners. “You’ve got this one narrow issue that’s basically spreading across the entire market.”
“Investors had been hoping for more certainty,” Bailey said. “Instead, they’re getting more uncertainty across the board.”
Energy and tech were the worst-performing sectors for the week. The energy sector fell 3.4% while tech — the largest S&P 500 sector by market weight — lost 2.8%.
Chipmakers led tech down this week as the VanEck Vectors Semiconductor ETF (SMH) dropped 5.6%. Qualcomm and Broadcom were the worst-performers in the ETF this week, dropping 18.8% and 11.7%, respectively.
Chip stocks have been under pressure as the U.S. increases pressure on Chinese telecom giant Huawei. Last week, the Trump administration made it harder for U.S. companies to do business with Huawei, before granting a temporary 90-day reprieve for the company.
Apple shares also contributed to the tech losses as several analysts raised concern over the company’s exposure to China. The stock ended the week down 5.3%.
“The growing worries around a US/China elongated trade battle and its implications on the tech space are heavily weighing on the minds of both investors and the companies themselves caught in the cross hairs,” Dan Ives, analyst at Wedbush Securities, wrote in a note to clients. “The ‘poster child’ for the US/China trade wars continue to be Apple with the stock under heavy pressure as many competitors are yelling fire in a crowded theater around the potential China impact to Cupertino if this situation worsens.”