Asia stocks mixed after Mnuchin’s weekend of triage

A man walks past a panel displaying half-day trading Hang Seng Index outside a bank in Hong Kong February 10, 2014. — Reuters pic
A man walks past a panel displaying half-day trading Hang Seng Index outside a bank in Hong Kong February 10, 2014. — Reuters pic

HONG KONG, Dec 24 — Asian stocks were mixed today after a weekend call by Treasury Secretary Steven Mnuchin to top US executives aimed at stemming the market panic which resulted in experiencing its worst week in a decade.

The Dow and the Nasdaq ended Friday with their biggest weekly drop since the start of the global financial crisis as investors took fright over a government shutdown in Washington, President Donald Trump’s public feuding with the Federal Reserve and the US- trade war returning to the forefront.

Hong Kong and Seoul both dropped in Monday’s trading while Sydney and Shanghai closed up. Tokyo was closed for a public holiday.

The mixed regional bag came after Mnuchin spent much of the weekend in damage control mode following multiple media outlets reporting that Trump had privately asked cabinet members if he has the authority to fire Fed Chairman Jerome Powell.

Last week, the hiked rates, infuriating Trump who has ignored the traditional respect for the Fed’s independence, calling it “crazy”, “out of control” and a greater economic threat than China.

Mnuchin denied the reports of Trump seeking Powell’s scalp, tweeting on Saturday that the president told him: “I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”

The following day, Mnuchin announced he had called senior executives from six of the largest American banks to discuss the market turmoil and received assurances.

“The banks all confirmed ample liquidity is available for lending to consumer and business markets,” the Treasury said in a statement attached to a tweet from Mnuchin announcing the calls.

“We continue to see strong economic growth in the US economy with robust activity from consumers and business,” Mnuchin was quoted in the statement as saying, adding that he would convene a call with the President’s Working Group on financial markets later today.

‘More panic and fear’

Analysts expressed both surprise and alarm at Mnuchin’s Sunday statement, saying it might do the opposite of calming current jitters.

“Nothing says don’t panic like saying ‘I’m calling the plunge protection team tomorrow’,” Michael O’Rourke, JonesTrading’s chief market strategist, told Bloomberg News.

“I honestly think that’s the type of event that’s going to startle markets and create more panic and fear when it’s meant to create confidence.”

Last week’s turmoil in Washington — which included a government shutdown that appears likely to last until at least Thursday and the abrupt resignation of Defence Secretary Jim Mattis — has spooked markets worldwide.

Japan’s Nikkei hit a fresh 15-month low on Friday with its fourth consecutive day of losses, joining the tech-rich Nasdaq in bear territory.

In today London and Paris were down 0.65 and 0.92 per cent respectively in early morning trade while Frankfurt was up 0.21 per cent. 

Oil inched higher in Asian trade after crude-producing nations said they expect prices will arrest their recent slide and rebalance early next year, when a deal on new production cuts takes effect.

However, analysts said prospects for a slowdown in the coming year — which would weaken crude demand — and rising US shale output are dampening sentiment and limiting any rebound from the current 15-month lows.

Prices have plunged by around 40 per cent from four-year peaks reached in early October on concerns about oversupply and weaker demand.

In foreign exchange markets, the yen rose 0.1 per cent to 111.10 per dollar, the euro was up 0.2 per cent at US$1.1390 and the pound was at US$1.2662, a 0.1 per cent rise.

Key figures around 0500 GMT

Tokyo — CLOSED

Hong Kong — Hang Seng: DOWN 0.4 per cent at 25,651.38

Shanghai — Composite: UP 0.43 per cent at 2,527.01

Euro/dollar: UP at 1.1390 from at US$1.1378

Dollar/yen: UP at 111.00 yen from 111.03

Pound/dollar: UP at US$1.2662 from US$1.2658

Oil — West Texas Intermediate: UP 43 cents at US$46.02 per barrel

Oil — Crude: UP 55 cents at US$54.37 per barrel

New York — Dow: DOWN 1.81 per cent at 22,445.37 (close)

London — FTSE 100: UP 0.1 per cent at 6,721.17 (close)

Bloomberg News contributed to this story — AFP

Source: The Malay Mail Online

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