HONG KONG, Nov 27 — Asian markets mostly rose today but traders remain on edge after Donald Trump warned he will ramp up his trade war with China if he does not reach a deal with Xi Jinping at upcoming talks.
The pound suffered losses in early European business after Trump warned Prime Minister Theresa May’s EU divorce agreement could hamper the chances of a trade deal between Washington and London.
With China and the US in the middle of an increasingly bitter standoff, there are hopes the two leaders will be able to work out an agreement that brings them back from the brink of a tariffs row that threatens to dent global growth.
In an interview with the Wall Street Journal published yesterday, Trump said he thought it “highly unlikely” the US would hold off more than doubling duties on US$250 billion of Chinese imports if there is no breakthrough.
“If we don’t make a deal, then I’m going to put the US$267 billion additional on,” he told the newspaper, referring to the remainder of Chinese imports that so far have not been hit with tariffs.
“The only deal would be China has to open up their country to competition from the United States.”
While some observers suggested the comments were a typical Trump ploy to apply maximum pressure on Beijing heading into the meeting, there remain fears about what the tycoon has in mind.
“It doesn’t sound like we will see Donald the Deal Maker but instead Trump the Trade Warrior at G20,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
Most regional markets extended yesterday’s global rally, which was fuelled by rising oil prices, Italy’s softer tone in its budget standoff with Brussels and Britain’s Brexit agreement with the European Union.
‘Great for the EU’
Tokyo ended 0.6 per cent higher and Sydney rose one per cent while Singapore added 0.1 per cent.
Seoul piled on 0.8 per cent, while Wellington and Taipei both edged up 0.1 per cent.
But Hong Kong dipped 0.2 per cent while Shanghai ended marginally down.
While the Trump-Xi meeting is the main event this week, investors are also keeping an eye on speeches from top Federal Reserve officials including boss Jerome Powell, which could signal a softer pace of interest rate hikes.
Rising US borrowing costs — fuelled by surging US growth — have been a major cause of concern for investors but recent comments from the central banker appear to show a more dovish outlook for 2019 as the global economy slows.
As business got under way in Europe the pound dropped against the dollar and euro following Trump’s comments about May’s draft Brexit deal.
“Sounds like a great deal for the EU,” he said at the White House yesterday. “You know, right now, if you look at the deal, they may not be able to trade with us, and that wouldn’t be a good thing,” he added.
London and Paris stocks opened flat, while Frankfurt rose 0.2 per cent.
On oil markets both main contracts remained under pressure despite Monday’s jump, with market-watchers waiting for next month’s gathering of Opec and non-Opec members hoping they will announce a cut in output.
The commodity has been hammered since early October by a series of issues including the uncertain global outlook, the trade war, rising supplies, slowing demand and weakness in China.
As trade tensions begin to bite on the global economy, analysts are predicting slower growth into next year, meaning there would be less demand for oil.
“It has been our long-held view that slower global economic activity would be a factor weighing on oil demand in 2019 and that the market would move into surplus,” London-based Capital Economics said.
Key figures around 0710 GMT
Tokyo – Nikkei 225: UP 0.6 per cent at 21,952.40 (close)
Hong Kong – Hang Seng: DOWN 0.2 per cent at 26,331.96 (close)
Shanghai – Composite: FLAT at 2,574.68 (close)
London – FTSE 100: FLAT at 7,033.30
Pound/dollar: DOWN at US$1.2750 from US$1.2806 at 2130 GMT
Euro/dollar: DOWN at US$1.1322 from US$1.1326
Euro/pound: UP at 88.70 pence from 88.44 pence
Oil – West Texas Intermediate: DOWN 34 cents at US$51.29 per barrel
Oil – Brent Crude: DOWN 29 cents at US$60.19 per barrel
New York – Dow Jones: UP 1.5 per cent at 24,640.24 (close)
Source: The Malay Mail Online