Trade Worries Hit Asian Markets But Widespread Holidays Thin Trade
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Asian Stocks Talking Points:
- Asian stocks turned lower on Monday
- A third round of US tariffs against China took effect
- Many key bourses were shuttered for holiday breaks, however
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Monday saw many Asian stocks market closed for the autumn equinox holiday, which took Tokyo, Shanghai and Seoul out of the game. Hong Kong and Sydney were open however and both their mainboards slipped as trade worries weighed once more, cutting through the optimism attendant on last week’s Wall Street records.
The latest round of US tariffs targeting Chinese imports came into effect on Monday. A new 10% levy will be slapped on goods from furniture to certain electrical appliances, which will rise to 25% at the end of this year. In return, Beijing has said it will impose its own tariffs on US imports. China has also moved to cancel trade talks, with relations clearly resistant to any semblance of a thaw.
While none of this was in any way unexpected, the Hang Seng was down by 1.2% as its Monday close approached. The ASX 200 did better and pared some losses. It was still in the red though, if by less than 0.1% in the late Sydney afternoon.
The Japanese Yen seemed to get some support from diminished risk appetite but, with so many important centers on the sidelines, foreign exchange trade was clearly subdued. The British Pound was clobbered at the end of last week by the European Union’s brusque rejection of London’s latest Brexit plan. However, it remains in the daily-chart uptrend forged against the US Dollar in mid-August, if only just.
Market closures meant that gold price action was also lacking. Crude oil prices did rise on a combination of OPEC declining to increase supply and looming US sanctions on Iranian exports. However, worries about trade conflict have raised the specter of weaker demand and this is keeping a lid on the market.
Still ahead on Monday’s rather sparsely populated economic data schedule is Germany’s IFO business- climate snapshot, commentary from European Central Bank President Mario Draghi and Mexican Consumer Price Index data.
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--- Written by David Cottle, DailyFX Research
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