TOKYO, Oct 10 — Global stocks tumbled and the safe haven yen and Swiss franc gained in early Asian trade today, on signs Washington and Beijing were still wide apart on trade issues and were making no progress in deputy-level talks.
The South China Morning Post (SCMP) reported the Chinese delegation, headed by Vice Premier Liu He, was planning to leave Washington after just a day of minister-level meetings, instead of as originally planned tomorrow.
“Barring any surprise today, it looks like their talk is breaking down. The tariff will be hiked. The situation looks dire,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
S&P500 mini futures slumped as much as 1.3 per cent, though they pared some losses following a tweet from a CNBC reporter that the White House said it was not aware of change in Liu’s plans. US stock futures last stood down 0.7 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.31 per cent while Japan’s Nikkei slip 0.11 per cent.
The SCMP report on the US-China trade talks came less than a couple of hours after US President Donald Trump told reporters he thought China wanted to make a trade deal more than he did.
Chinese government officials told Reuters that Beijing has lowered expectations for significant progress from this week’s trade talks with the United States, upset by the blacklisting of Chinese companies.
Top negotiators from the two countries were scheduled to meet in Washington today and tomorrow to try to end a bruising 15-month-old trade war.
Without significant progress, Trump is set to hike the tariff rate on US$250 billion (RM1.04 trillion) worth of Chinese goods to 30 per cent from 25 per cent next Tuesday.
China is unlikely to be willing to make an easy compromise with a US president who seems increasingly vulnerable to domestic political pressure as opposition Democrats seek to impeach him, Mitsubishi’s Fujito added.
US Democratic presidential contender Joe Biden called for the impeachment of Trump for the first time in a deepening partisan fight over a congressional investigation of the Republican president.
Before the report over stalled trade talks, share prices had gained yesterday, with the S&P 500 rising 0.91 per cent on hopes of a possible compromise between the world’s two biggest economies.
In the currency market, the yen advanced up to 0.4 per cent to 107.035 to the dollar and last stood at 107.33.
The Swiss franc also gained as much as 0.4 per cent to 0.9923 franc per dollar.
The Chinese yuan dropped 0.4 per cent in offshore trade to 7.1685 per dollar, touching its lowest in five weeks before bouncing to 7.1461.
The euro firmed slightly to US$1.0986.
Sterling wobbled near one-month lows against the dollar and the euro as hopes of a break-through on a key sticking point for a Brexit deal were dashed.
Northern Ireland’s Democratic Unionist Party, a coalition partner in the British government, said it would emphatically oppose a reported European Union concession on the Irish backstop under any Brexit deal.
The pound last stood at US$1.2212, near Tuesday’s five-week low of US$1.2196.
The Turkish lira retreated to six-week lows as Turkish troops, together with their Syrian rebel allies, attacked Kurdish militia in northeast Syria, opening a fresh chapter in Syria’s eight-year-old civil war.
The lira fell to 5.8777 per dollar, the lowest since its flash crash on August 26.
US Treasuries yield slipped back after having risen to 1.594 per cent yesterday, pressured partly by this week’s heavy bond supply.
The 10-year US Treasuries yield dropped 3.3 basis points today to 1.554 per cent.
The price of front-end Fed funds rate futures gained, however, on increasing bets on more rate cuts by the US Federal Reserve.
The November contract is almost fully pricing in a 0.25 percentage point cut on October 30.
Oil prices also slid on the report on US-China talks.
Brent crude futures fell 0.55 per cent to US$58.00 a barrel while US West Texas Intermediate (WTI) crude lost 0.48 per cent to US$52.34 per barrel. — Reuters
