Markets Aug 19

Asian markets off highs on US-China tensions

Tensions spike after Trump says he won't talk to China; Hong Kong in delayed start due to typhoon; Japan exports surprise 

Asian markets off highs on US-China tensions
A man walks past an electric screen showing Japan's Nikkei and Shanghai Stock Exchange markets' indices outside a brokerage in Tokyo on July 1, 2019. Photo: Issei Kato/ Reuters.

(ATF) Asian markets are off highs amid worries about US-China tensions after a firm start on the back of record highs at Wall Street.

Hong Kong’s markets had a delayed start due to a typhoon with the Hang Seng Index up marginally at 0.1%.

The mainland CSI300 benchmark is down 0.54% amid rising tensions as worries mounted after US President Donald Trump confirmed he had cancelled talks with China.

“I don’t want to deal with them now. With what they did to this country and to the world, I don’t want to talk to China right now,” Trump said.

Tensions have also heightened after the US State Department asked colleges and universities to divest from Chinese holdings in their endowments, according to Bloomberg News.

But Japan’s Nikkei benchmark is up 0.39% and Australia’s S&P ASX 200 is 1.1% higher after the S&P 500 and Nasdaq Composite set records overnight.

The S&P 500 rose 0.23% at a record close of 3,389.78 points, after hitting an intra-day high of 3,395.06. The Nasdaq gained 0.73%, hitting another high but the Dow Jones Industrial Average dipped 0.24%.

Gold has steadied at $1,992 after dipping from overnight levels as it failed to break the $2,000 level again.

The risk-off environment is boosting demand for US Treasuries as well, with the 10-year yield down one basis point at 0.66%. The US dollar has also stabilised but remains below the 93 mark against a basket of currencies.

Japan’s Nikkei rose after the drop in export values in July marked an improvement from the previous month.

“The July trade data are consistent with our view that net exports will provide a large boost to Q3 GDP growth,” Marcel Thieliant, senior Japan economist at Capital Economics, said.

“Looking ahead, the export climate index, a weighted average of the PMIs of Japan’s trading partners, rose above 50 in July and points to a strong rebound in export volumes.”

Credit markets are witnessing a steady stream of primary deals with Wynn Macau reopening its 2026 bonds and Nan Fung International issuing a bond mandate.

Overnight Hysan Development priced a perpetual bondICBC Financial Leasing sold a keep-well supported bond, and Yangzhou Construction issued a 3-year bond.