Asian stocks mixed as US-China trade tensions simmer

Asian stocks were mixed on Monday morning as investors attempted to shake off jitters about trade tensions between the United States and China.

In Australia, the benchmark ASX 200 fell 0.12 percent by mid-morning as the heavily weighted financial sector declined 0.8 percent. Major banking stocks were lower.

Shares of Commonwealth Bank fell 1.92 percent as of 9:47 a.m. HK/SIN. Before market open, Australia’s largest lender said it would spin off its wealth management and mortgage broking businesses, and undertake a strategic review of its general insurance business, including a potential sale.

At the same time, the bank also announced a series of appointments and changes to its executive leadership team.

The energy sector was up 1.68 percent as oil stocks mostly advanced. Share of Santos rose 2.02 percent, Oil Search was up 2.34 percent and Woodside Petroleum gained 1.69 percent.

Japan’s Nikkei 225 was down 0.51 percent while the Topix index fell 0.51 percent. Across the Korean Strait, the Kospi was down 0.42 percent. Hong Kong’s Hang Seng index was fractionally lower in early trade.

Chinese mainland markets bucked the downward trend to trade up. The Shanghai composite was up 0.26 percent while the Shenzhen composite added 0.63 percent.

On Sunday, President Donald Trump doubled-down on his rhetoric on Twitter, calling on other countries to end all trade barriers or face a new round of retaliatory measures.

Last week, Trump requested the United States Trade Representative identify $200 billion worth of Chinese goods for potential additional tariffs at a rate of ten percent. That threat followed levies announced by both nations earlier in the month. Consequently, Beijing said it could deliver its own set of new counter measures.

The uncertainty over a trade war, and the tit-for-tat dispute between the two countries, sent markets around the globe on a roller-coaster ride last week. Still, reports suggested that some White House officials were trying to restart talks with China to avoid a full-blown trade war.

“What is clear from weekend developments is that U.S. President Trump is unlikely to stop any time soon on his tariffs threats,” analysts at Singapore’s OCBC Bank said in a Monday morning note. “China’s policymakers are stepping up to counter the tariff tantrum with domestic stimulus measures.”

Indeed, the People’s Bank of China said on Sunday that it would cut the amount of cash that some banks must hold as reserves by 50 basis points, releasing $108 billion in liquidity, to spur lending to smaller firms, according to Reuters. The Chinese central bank said the targeted cut will take effect on July 5, the report said.

The on-shore yuan fell against the dollar with the pair trading at 6.5177 at 9:57 a.m. HK/SIN, weakening from an earlier high of 6.4999. The off-shore yuan also weakened against the dollar, trading at 6.5273.

Elsewhere, the greenback slipped against a basket of currencies as the dollar index traded at 94.49, falling from levels above 94.8 reached in the previous week. Still, the index was up from an earlier session low of 94.452.

Among other currency pairs, the Japanese yen traded at 109.5 to the greenback. The Australian dollar fetched about $0.7427.

Meanwhile, the Turkish lira traded at 4.6484 to the dollar, weakening from an earlier high of 4.5791. That followed reports that said President Tayyip Erdogan had 56.5 percent of the vote with half of the votes counted in Turkey’s presidential election on Sunday.

Oil prices were down Monday morning during Asian trade. U.S. crude fell 0.34 percent to $68.35 a barrel while global benchmark Brent slipped 1.79 percent to $74.2.

OPEC ministers announced a deal on Friday that will increase oil supplies from the oil cartel, following a week of tense negotiations in Vienna, Austria. The producer group had been capping output in order to balance the market and boost prices for the last 18 months. The lack of clear output targets left markets confused.

Source: CNBC