HONG KONG, March 20 — Asian markets mostly fell today with nervous investors keeping tabs on developments in China-US trade talks and the Brexit saga, while awaiting the conclusion of a key Federal Reserve meeting.
General optimism about the outlook for the tariffs negotiations has helped propel equities higher across the world this year — offsetting concerns about the outlook for the global economy — with both Washington and Beijing sounding broadly positive.
But dealers have been spooked by a report that some US officials are feeling some pushback from China on a number of demands, including on the crucial issue of intellectual property.
The unnamed negotiators said the Chinese side was growing concerned at the lack of assurances that US duties would be removed, according to the Bloomberg story.
While the report also said the resistance was regarded by some as a normal part of talks, it highlighted their fragile nature, with fears already raised earlier this month by the delay of a flagged signing summit between President Donald Trump and his Chinese counterpart Xi Jinping.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will return to Beijing next week to resume talks.
Hong Kong dropped 0.5 per cent after a four-day rally, while Shanghai closed marginally down.
Sydney fell 0.3 per cent, Singapore was off 0.4 per cent and Seoul flat.
However, Tokyo recovered from an early sell-off to end 0.2 per cent higher, while Taipei, Manila and Jakarta also rose.
‘Political, economic costs’
Adding to unease on trading floors is continued uncertainty surrounding Britain’s drawn-out departure from the European Union.
Prime Minister Theresa May is expected to ask the bloc for an extension of the March 29 deadline for leaving, having seen her exit proposals killed off by MPs.
However, EU top negotiator Michel Barnier said any delay would have “political and economic costs” for the bloc’s remaining 27 states.
“A long extension... should be linked to something new, a new element or new political process,” he told reporters, while reports said May could be considering another general election or even a second referendum.
Observers expect the exit date to be put back but there is a concern that it could be rejected, leaving Britain to crash out of the EU without a deal, which many warn could be devastating for the economy.
European Commission President Jean-Claude Juncker said Wednesday it was unlikely leaders would reach a decision on Brexit at this week’s summit in Brussels.
Despite the turmoil, the pound continues to hold its own against the dollar, with a long extension considered positive for the unit, though observers remain on edge.
“For now, the pound appears to be reflecting the optimism of the market that common sense will prevail. However... that is a big assumption given the current febrile political atmosphere,” said Michael Hewson, chief market analyst at CMC Markets UK.
The Fed’s March policy meeting concludes later in the day, with analysts predicting it will announce a slower pace of interest rate hikes — to one from the two previously tipped — as the economy shows signs of softening.
Bank boss Jerome Powell’s post-meeting comments will be pored over for some forward guidance.
But OANDA senior market analyst Alfonso Esparza warned: “A more-dovish-than-expected (statement) could spook investors and see them headed for safe havens if growth expectations are low at the same time as uncertainty on Brexit and the US-China trade deal are on the rise.”
In early trade London fell 0.3 per cent, Paris slipped 0.2 per cent and Frankfurt shed 0.7 per cent.
Key figures around 0820 GMT
Tokyo – Nikkei 225: UP 0.2 per cent at 21,608.92 (close)
Hong Kong – Hang Seng: DOWN 0.5 per cent at 29,320.97 (close)
Shanghai – Composite: FLAT at 3,090.64 (close)
London – FTSE 100: DOWN 0.3 per cent at 7,301.59
Pound/dollar: DOWN at US$1.3258 from US$1.3268 at 2100 GMT
Euro/pound: UP at 85.61 pence from 85.55 pence
Euro/dollar: DOWN at US$1.1349 from US$1.1351
Dollar/yen: UP at 111.54 yen from 111.40 yen
Oil – West Texas Intermediate: DOWN six cents at US$58.97 per barrel
Oil – Brent Crude: UP eight cents at US$67.69 per barrel
New York – DOW: DOWN 0.1 per cent at 25,887.38 (close)
— AFP
