Asia Pacific Stocks Talking Points:
- All major indexes were lower Thursday
- News that the World Trade Organization had upheld US complaints against the EU did nothing for sentiment
- The US Dollar started weaker but regained some ground against most majors
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Trade was back in the driving seat for nervous Asia Pacific equity markets on Thursday with news that the World Trade Organization has given the US the right to put tariffs on $7.5 billion of European goods.
Washington had complained about subsidies received by Airbus from numerous European governments.
This new front in the global trade war comes as China and the US are set to meet next week. There’s been some cooling of rhetoric between the two giants, but a lasting settlement remains elusive. Global growth fears are growing too. The US economy had previously been a source of reassurance for investors on this score, but a key measure of manufacturing output turned in a very feeble reading this week, retreating to ten-year lows.
Local economic numbers were more mixed. Australia’s trade balance came in just a little lower than expected, with weaker commodity prices weighing. Exports have been a real bright spot for the Australian economy in recent months but may now be cooling somewhat. Hong Kong’s August retail sales plunged to record lows, with the protests that have wracked the territory clearly taking a toll.
Mainland Chinese stock markets remained closed for holiday on Thursday, but the rest of the region was trading with all open indexes lower. The Nikkei 225 was down 1.8% as its afternoon session got under way, with the Hang Seng down by 0.5%. In South Korea the Kospi shed 2% but the day’s biggest loser was Australia’s ASX 200. It was down 2.2%.
This week’s falls have seen the Sydney benchmark abandon at last the trading range which has been intermittently important since mid-June and which, in late July, proved to be a launchpad for the ascent to record highs.
If the bulls can’t get matters back in hand then the entire rise up from August’s lows could be under immediate threat.
Australia’s risk-sensitive big four banks were all lower on the day, with most other sectors under pressure. Gold miners caught their customary haven bid but this was nowhere near enough to offset the drag on the index overall.
Haven bids were also to be seen in the currency markets with the Japanese Yen and Swiss Franc doing well. Overall moves were quite restrained in the Asian session, however, with USD/JPY down by less than 0.1% on the day in the Tokyo afternoon.
The remainder of the global day will see investors waiting nervously for the non-manufacturing equivalent of that US survey which decked markets earlier this week. Official durable goods order numbers are also due.
Asia Pacific Stocks Resources for Traders
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--- Written by David Cottle, DailyFX Research
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