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Asian Shares Down as US-China Trade Tensions Linger

James Hyerczyk
The early weakness in Asia appears to be a reaction to Wednesday’s performance on Wall Street. Shares in the U.S. were under pressure all session after U.S. Treasury Secretary Steven Mnuchin essentially said trade talks had stalled with no new negotiations scheduled. This made investors nervous because it dampened hopes of a speedy resolution to the trade war.

The major Asia/Pacific stock indexes are down across the board on Thursday amid the ongoing trade tensions between the United States and China. Accommodative U.S. Federal Reserve minutes, weak technology and energy sectors and domestic events also weighed on Asian share prices. Early in the session, losses were led by a more than 1% drop in the Shanghai composite, the Shenzhen component and the Shenzhen composite.

At 04:07 GMT, Japan’s Nikkei 225 Index is trading 21127.68, down 155.69 or -0.73 percent. Hong Kong’s Hang Seng Index is at 27340.96, down 364.98 or -1.32 percent. The South Korean KOSPI is trading 2061.90, down 2.96 or -0.84 percent.

In Australia, the S&P/ASX 200 Index is trading 6496.70, down 14.00 or -0.22. In China, the Shanghai Index is at 2867.48, down 24.23 or -0.84.

Asian Markets Mirroring Wall Street Weakness

The early weakness in Asia appears to be a reaction to Wednesday’s performance on Wall Street. Shares in the U.S. were under pressure all session after U.S. Treasury Secretary Steven Mnuchin essentially said trade talks had stalled with no new negotiations scheduled. This made investors nervous because it dampened hopes of a speedy resolution to the trade war.

China May Be Rethinking Economic Ties with US

An article in the South China Morning Post also weighed on investor sentiment. According to the article, “The decision by the United States to impose tariffs on all Chinese products and put smartphone maker Huawei on a trade blacklist that could choke off vital components has severely damaged the fragile trust between the two countries, forcing China to re-examine the entire bilateral economic relationship to protect itself, according to Chinese researchers.”

More importantly, “The escalation of US trade tariffs and the Huawei blacklisting have also reinforced Beijing’s long-standing belief that it has to rely on itself for key technologies and resources.”

“The trade war, as seen from the current situation, will be a long-term issue,” Zhang Yongjun, a senior economist of the China Centre for International Economic Exchanges, said last week-end. “To fight the trade war, China must boost its domestic market demand.”

Plunge in Softbank Group Weighs on Nikkei 225

The Nikkei 225 dropped nearly 1 percent early in the session, weighed down by shares of index heavyweight and conglomerate Softbank Group plunged more than 5 percent after sources told Reuters that U.S. Justice Department staff have recommended blocking a deal between T-Mobile and rival Sprint.

Reuters reported, “The U.S. Justice Department’s antitrust division staff has recommended the agency file a lawsuit to block T-Mobile US’s $26 billion acquisition of smaller rival Sprint, according to two sources familiar with the matter.”

This article was originally posted on FX Empire

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