Asian Stocks Wilt As Cohn Walks Out, Trade War Fears To Dominate
- Asian bourses were all lower as their trading session wound up
- The resignation of White House economic advisor Gary Cohn did the damage
- Australian growth came in below forecasts too
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Asian markets were mostly lower after an unsettled day of trade Wednesday, a day which saw the resignation of White House economic advisor Gary Cohn had resigned.
Cohn opposed the imposition of tariffs on imports of steel and aluminum now favored by the Trump Administration, to the point where his position had clearly become untenable. His departure has revived fears of global protectionism and the possibility of a long round of tit-for-tat trade barriers.
With that in mind it's hardly surprising that exporter-heavy Asia Pacific markets should have struggled and indeed they did. The Nikkei 225 ended down 0.7% with the ASX 200 off by 1% and all other regional indexes lower.
The US Dollar was broadly down too, to the benefit of the perceived-haven Japanese Yen. Risk appetite had been stoked earlier by hopes that North Korea was amenable to talks about its nuclear program, however trade fears eclipsed even that optimism. Senior DailyFX Currency Strategist Ilya Spivak thinks that the Japanese currency could yet go higher if global trade is perceived to be under sustained protectionist threat. The Australian Dollar climbed against its US cousin, but was knocked back a little when official growth data came in a shade under expectations. Markets didn't expect Australian interest rates to rise this year in any case, but the idea that Australia has seen the best growth of this cycle seems to be taking hold.
Still on the data sked Wednesday, Eurozone Gross Domestic Product figures and the US employment report from Automated Data Processing. The latter has put in long service as a curtain raiser to official payroll data which are coming up on Friday. The Bank of Canada will make its March monetary policy call- with no change to interest rates expected. Crude oil inventory data from the US Department of Energy will round out the global day.
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--- Written by David Cottle, DailyFX Research
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