Hopes for a speedy resolution to the US-China trade impasse lifted Asian stocks early on Friday, but gave way to doubts later in the global trading day that pushed Wall Street lower.
Trading in Asia started with a bang after US President Donald Trump hailed positive talks with Chinese President Xi Jinping (習近平), which was a rare sign of hope in the stand-off between the world’s top two economies.
A report by Bloomberg News later said Trump had asked officials to draw up a bill as he eyes a potential trade deal between the two.
Bourses in Shanghai, Hong Kong and Tokyo all rose more than 2.5 percent, while the positive commentary also boosted European shares, with the pan-European STOXX 600 rising 0.28 percent and MSCI’s gauge of stocks across the globe shedding 0.06 percent.
US stocks too got off to a winning start, but the momentum quickly vanished on doubts about the likelihood of an imminent agreement.
White House economic adviser Larry Kudlow poured cold water on expectations for a breakthrough, telling CNBC that “there’s no massive movement to deal with trade,” in an interview that helped push stocks lower.
Trump then told reporters that he expected a “very good deal” with China, helping to lift stocks marginally from session lows.
However, US stocks finished the session solidly lower, ending a three-day winning streak.
The Dow Jones Industrial Average fell 109.91 points, or 0.43 percent, to 25,270.83, the S&P 500 lost 17.31 points, or 0.63 percent, to 2,723.06 and the NASDAQ Composite dropped 77.06 points, or 1.04 percent, to 7,356.99.
“The wind was taken out of the sails” by the “walking-back” from Trump officials on trade, said Art Hogan, chief market strategist at B. Riley FBR Inc. “The largest headwind in this market is China trade.”
Sentiment on Wall Street was further dented by Apple Inc, which slumped 6.6 percent as investors focused on lower-than-expected volume of iPhone sales and expressed disappointment at the fourth-quarter sales outlook, which was lower than some analysts expected.
In its closely watched jobs report, the US Department of Labor reported that the US last month added 250,000 net new positions, handily overshooting forecasts.
That data, along with the fastest gain in wages since April 2009 at a 3.1 percent annual increase, helped cement expectations that the US Federal Reserve will continue to gradually increase interest rates.
“The key takeaway from that report is that it is consistent with labor market trends that will keep the Federal Reserve on a tightening path,” Briefing.com analyst Patrick O’Hare said.
Oil giants Exxon Mobil Corp and Chevron Corp rose 1.6 percent and 3.2 percent respectively after both reported big increases in third-quarter earnings, with Chevron’s profits more than doubling to US$4 billion.
Food giant Kraft Heinz Co plummeted 9.7 percent after reporting a 33.3 percent fall in third-quarter profits to US$630 million due to higher costs, but Starbucks Corp surged 9.7 percent after reporting a 3 percent rise in comparable store sales, topping analysts’ expectations.
Additional reporting by Reuters
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS