Market Close Mar 19

Asia markets roiled by stormy US-China talks 

China underperforms after fiery start to US talks; BoJ drops stock purchase target; Oil consumption forecasts cut   

Asia markets roiled by stormy US-China talks 
Markets were also unsettled by the Bank of Japan’s decision to drop its annual target for stock purchases.

HONG KONG: Asian markets stumbled after a stormy opening at the US-China talks renewed worries about tensions between the world’s two biggest economies.

This sent investors to safe havens like US Treasuries, gold and the dollar – 10-year yields fell 2 basis points to 1.69% and the dollar added 0.1% to 91.90 against a basket of currencies. Gold rose 0.3% to $1,741.21 per ounce.

Japan’s Nikkei 225 index fell 1.4%, Australia’s S&P ASX 200 slipped 0.56%, Hong Kong’s Hang Seng index tumbled 1.41% and China’s CSI300 underperformed diving 2.62% as investors got the chills from a frosty opening to the US-China talks. Regionally, the MSCI Asia Pacific index eased 0.24%.

Read more: Yuan waiting on Fed, Japanese yen tightening

“The first person-to-person meeting between US Secretary of State Antony Blinken and China’s top diplomat Yang Jiechi that started in Alaska yesterday has dampened the market’s hope for less US-China tensions under the Biden administration,” said Chang Wei Liang and Philip Wee, strategists at DBS Bank.

Markets were also unsettled by the Bank of Japan’s (BoJ) decision to drop its annual target for stock purchases and said the 10-year Japanese government bond yield could move more freely around its zero target.

The central bank dropped its 6 trillion yen target and said it would let the 10-year JGB yield move in a range between minus 0.25% and plus 0.25%. It had earlier made a verbal guidance that put the band roughly between minus 0.2% and plus 0.2%.

OIL SUBDUED

Brent crude futures bounced 82 cents to $64.09 a barrel. US crude rose 88 cents to $60.88 rebounding from the previous day’s fall. But analysts expect prices to remain subdued.

“We are lowering our expectation for oil-demand growth this year, bringing it more in line with levels expected by OPEC, the IEA and EIA,” said analysts at BCA Research while cutting their oil demand growth this year to 5.5mm b/d, down from 6.6mm b/d last month.

 Asia Stocks

  • Japan’s Nikkei 225 index down 1.4%
  • Australia’s S&P ASX 200 slipped 0.56% 
  • Hong Kong’s Hang Seng index tumbled 1.41%
  • China’s CSI300 dived 2.62%
  • The MSCI Asia Pacific index eased 0.24%.

Stock of the day

Kaisa Prosperity shares rose as much as 29.3% after it reported a 35% rise in net profit with a sharp increase in cash balances as well. Sentiment was lifted by the company’s plan to build a government enterprise joint venture platform, while actively carrying out government-enterprise cooperation, undertaking the functions of property cities, and creating a comprehensive urban integrated service model.

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Nikkei Hang Seng CSI300 MSCI Bank of Japan