SHANGHAI -- Asian shares fell on Monday morning, while gold prices held firm as investors worried a prolonged Sino-US trade war could tip the world and US economies into recession.
In early trade, MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.17 percent, after Wall Street broke a three-day winning streak to end lower on Friday.
Australian shares dipped about 0.1 percent while the South Korean market clawed back from early losses to rise 0.12 percent.
Markets in Japan and Singapore were closed for a holiday Monday.
US shares finished lower on Friday after US President Donald Trump said that Washington was continuing trade talks with Beijing, but that the US was not going to make a deal for now.
Those comments helped to drive a late sell-off in a volatile session that saw the Dow Jones Industrial Average fall 0.34 percent, the S&P 500 lose 0.66 percent and the Nasdaq Composite drop 1 percent.
White House trade adviser Peter Navarro subsequently said that the United States was still planning to hold another round of trade talks with Chinese negotiators.
The uncertainty and lack of progress around the talks have kept financial markets on edge over recent months, with investors pulling out funds from riskier assets amid the slowdown in global growth and corporate profits.
Worries about the damaging effects of the trade war between the world's two biggest economies were underscored by a warning from Goldman Sachs of the rising risk of a US recession, and that it no longer expects a trade deal before the 2020 US presidential election.
Elsewhere, there was little positive news. Data last week showed the British economy unexpectedly shrank for the first time since 2012 in the second quarter, while German industrial production suffered its biggest annual decline in nine years. All of that raised global recession fears as the escalating Sino-US tariff war took a toll on trade and investment.
"Cross asset correlations and money flow continue to tell (us) that this funk in markets is a genuine result of fear and uncertainty from traders and investors," said Greg McKenna, strategist at McKenna Macro.
A flight to perceived safe-haven assets helped to lift the price of gold above $1,500 last week for the first time since April 2013. After giving up some gains on Friday, the precious metal was higher on Monday, rising 0.18 percent to $1,499.52 per ounce.
In currency markets, sterling matched its January 17, 2017 low against the US dollar, buying as little as $1.2015 in early Asian trade Monday before trimming losses. The British pound last bought $1.2028.
The UK currency came under pressure on Friday after the downbeat data on the British economy.
The dollar dropped 0.25 percent against the yen to 105.40, while the euro edged higher to $1.1203.
The dollar index, which tracks the greenback against a basket of 6 major rivals, was barely changed at 97.513.
Oil prices dipped, having risen sharply on Friday on a drop in European inventories and production cuts by the Organization of the Petroleum Exporting Countries.
US crude was down 0.53 percent to $54.21 a barrel and global benchmark Brent crude shed 0.51 percent to $58.23 per barrel.
source: news.abs-cbn.com
TOKYO -- Asian shares caught the tail of a Wall Street rally on Friday, helped by China's better-than-expected export figures but fresh concerns about Sino-US trade ties are likely to limit gains in the region.
Weighing on risk appetite was a report from Bloomberg that Washington is delaying a decision about licenses for US firms to restart trade with Huawei Technologies. That sent US stock futures down as much as 0.6 percent in early Asian trade. They were last quoted 0.4 percent lower on the day.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent but was on track to lose 2.3 percent for the week.
Japan's Nikkei average advanced 0.6 percent, while Australian stocks stood flat and South Korean stocks gained 1.0 percent.
On Wall Street, the S&P 500 registered its largest one-day percentage gain in about two months on Thursday, with the Dow and the Nasdaq also climbing more than 1 percent.
However, that optimism was dented by the Bloomberg report, which has reinforced concerns the deterioration in US-China relations will place additional strain on an already fragile global economy.
"The news about Huawei triggered the rise in the yen," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo. "This is a reminder that the US-China trade dispute remains a risk, and this risk is not receding."
The yen strengthened as much as 0.4 percent against the dollar to 105.70 yen on a fresh worries triggered by a Bloomberg report.
US data pointed to a robust labor market as the number of Americans filing applications for unemployment benefits unexpectedly fell last week, allaying some worries about a recession and helping Treasury yields rise.
Benchmark 10-year Treasury yields closed 2.4 basis points higher at 1.715 percent after hitting 1.595 percent on Wednesday, which was their lowest level since October 2016.
The offshore yuan was stable versus the dollar in early trade but could be closely watched as traders assess the latest developments in the rapidly escalating trade war between the United States and China.
"The US-China trade war is very serious. My hope is that the United States and China can find enough to agree on so that they can contain the push-and-shove that occurs when the emerging power meets the dominant power. The alternative is not pleasant," said veteran investor Dan Fuss, vice chairman of Loomis Sayles.
"I think the rate cuts by the Asian central banks were in response to the weakening business environment due to the trade wars. The Fed is influenced by the same things and that will probably cause a further rate cut here."
Central banks in New Zealand, Thailand and India stunned financial markets on Wednesday with a series of surprising interest rate cuts and pointing to policymakers' dwindling ammunition to fight off a downturn.
On Thursday, the Philippine central bank joined the bandwagon and cut its key policy rates, whilst keeping the door open for further easing.
Oil jumped more than 2 percent on Thursday on expectations that falling prices could lead to production cuts.
Brent crude rose 0.4 percent to $57.63 per barrel and US West Texas Intermediate (WTI) crude climbed 0.5 percent to $52.79.
Spot gold held near the more than six-year peak touched Wednesday, rising 0.3 percent to $1,505.20 an ounce as investors sought the safety of the precious metal.
source: news.abs-cbn.com
HONG KONG - Asian factory activity contracted further in July, fueling worries that a Sino-US trade war and a slowdown in China could tilt the world towards a global recession, which central banks will have to fight with depleted ammunition.
Purchasing Managers' Indexes (PMI) showed manufacturing activity contracting in China for a second consecutive month, while export driven economies in North Asia - Japan, South Korea and Taiwan - have been in pain for longer.
Among the emerging market economies of Southeast Asia, Indonesia registered a contraction, but others have benefited from a redirection of trade flows away from China.
Data later in the day is likely to show European manufacturing shrinking as well, while US factories are expected to maintain a modest pace of expansion.
The Federal Reserve cut interest rates on Wednesday, but, reflecting the relative strength of the US economy, Chairman Jerome Powell said the move may not be the start of a lengthy easing campaign. He signaled, however, that the Fed could cut further.
The Bank of Japan and the European Central Bank have flagged their readiness to ease policy in the past week, despite having far less room than the Fed to do so.
"The numbers have been bad for a couple of months already," said Irene Cheung, Asia strategist at ANZ.
"Things seem to be stabilizing a little bit, but they're not recovering, the trade tensions are still there. We don't see good news on the growth front yet. We expect (more) interest rate cuts in the region."
In China, Asia's economic center of gravity, the Caixin/Markit Manufacturing PMI for July rose to 49.9 from 49.4 in June, remaining below the neutral 50-mark dividing expansion from contraction on a monthly basis.
The readings were largely in line with an official gauge that showed factory activity last month shrank at a slower-than-expected pace.
Analysts said the numbers reflected some impact of recent stimulus by Chinese authorities, but the manufacturing outlook remained a source of concern as a trade conflict with the United States was expected to drag on.
China’s manufacturing sector may have lost 5 million jobs over the last 12 months, including possibly as many as 1.8-1.9 million due to the trade war, investment bank China International Capital Corp (CICC) said in a report last month.
US and Chinese negotiators ended a brief round of trade talks on Wednesday with little sign of progress and agreed to meet again in September.
The White House and China's Commerce Ministry each described the meetings in Shanghai as constructive, but neither announced any agreements or goodwill gestures that might have cleared the path to more substantive future talks.
The International Monetary Fund has warned that the trade dispute will shave 0.2 percent off global output. Many economists say any escalation could lead to a global recession.
"We expect that this downward trend in manufacturing will continue in 2019 until the trade and technology negotiations make some progress," said Iris Pang, Greater China economist at ING.
While more stimulus from Chinese policymakers is expected down the line, the People's Bank of China gave no sign of whether it will immediately follow the Fed's rate cut, as it has done on occasion.
TRADE WAR FALLOUT
Elsewhere in Asia, Japanese manufacturing deteriorated for a third month in July, while South Korea's factory activity contracted further with new export orders shrinking at its fastest pace in nearly 6 years.
South Korea's exports, a bellwether for global trade, tumbled for an eighth straight month in July as an escalating political and economic dispute with neighboring Japan painted an increasingly gloomy picture for Asia's fourth-largest economy.
Early in July, Japan tightened restrictions on exports to South Korea of key materials used to make memory chips and display panels. Economists say the curbs could shave 0.4 percentage points off South Korea's GDP this year.
In Taiwan, the streak of contraction reached its 10th month, while Indonesia saw its first below-50 number in 6 months. Vietnam, Philippines and Thailand saw mildly positive growth. In India, where the economy relies more on domestic demand, manufacturing growth accelerated slightly.
In Hong Kong, the central bank cut its base rate for the first time in a decade, as its currency peg to the US dollar forces the monetary authority to move in lock-step with the Fed.
The financial hub's economy grew by a less than expected 0.6 percent in the second quarter from a year earlier, mainly affected by slower global trade. An increasingly violent cycle of pro-democracy protests in the Chinese-ruled city, however, is beginning to take a heavy toll on retail and tourism and could bring the economy to a halt in coming quarters.
"Eight consecutive weeks of mass protests since early June have already brought immediate disruption to inbound tourist arrivals, retails sales and the property market," BofA Merrill Lynch analysts said in a note.
"We expect to see more evidence of adverse impact in the third quarter," they said, adding they revised their full-year growth forecasts to 0.8 percent in 2019 and 0.7 percent in 2020, from previous estimates of 2.2 percent and 2.7 percent, respectively.
source: news.abs-cbn.com
