Asian shares ease as US-China trade talks begin

February 14, 2019
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are meeting with China’s top economic czar Liu He/AFP

, HONG KONG, China, Feb 14 – Asian stocks eased Thursday as traders anxiously awaited news from high-level US-China talks under way in Beijing while official data showed trade between the world’s two largest economies plunged.

Negotiators kicked off discussions in the Chinese capital aimed at defusing a row that has already triggered tariffs on billions of dollars’ worth of exports and threatened to stymie global growth.

Failure to resolve the dispute would initiate a sharp hike in US tariffs on $200 billion of Chinese goods, although President Donald Trump indicated this week he could extend his March 1 deadline if progress is made in Beijing.

Trump told reporters in the Oval Office on Wednesday that preliminary discussions in Beijing had gone “very well”, Bloomberg reported, adding that the US president was considering a 60-day deadline extension according to unnamed sources.

“Based on the positive signals from the US-China trade negotiations, further tariff hikes will likely be suspended,” noted Louis Kuijs of Oxford Economics, as US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met with China’s top economic czar Liu He.

But a wide gulf remains on some issues. The US is demanding far-reaching changes to Chinese practices that it says are unfair.

Hong Kong dropped 0.2 percent from its highest closing level in six months the previous day, while Shanghai edged down 0.1 percent.

An unexpected rise in Chinese exports – particularly to Europe and Southeast Asia – had little bearing on markets as imports for January fell, with reciprocal tariffs taking effect and the domestic economy continuing to slow.

China’s huge trade surplus with the US – a source of anger within the Trump administration – narrowed from December to $27.3 billion.

But Chinese exports across the Pacific were down two percent, and American imports plunged 41 percent, compared to the previous January.

“The broad trend in shipments still appears to be pointing down,” said Julian Evans-Pritchard of Capital Economics.

“The downbeat outlook for global growth means that this year is likely to be challenging for Chinese exporters, even if the ongoing US-China trade negotiations culminate in a deal,” Evans-Pritchard wrote in a research note.

In Hong Kong, smartphone component maker Sunny Optical dropped 4.9 percent as a stock exchange filing showed a sharp fall in net profit for last year.

Oil boom

Tokyo edged fractionally down as investors locked in recent gains that had pushed the market to a two-month high.

Japanese government data showed the economy expanded in the final quarter of 2018, with the negative impact from a series of natural disasters over the summer receding.

But the quarter’s 0.3 percent expansion was slightly below forecasts.

In Europe, London opened 0.4 percent higher, while Frankfurt won 0.8 percent and Paris advanced 0.9 percent.

Oil prices extended gains after the International Energy Agency reported lower output from OPEC producers.

Both the main crude oil contracts lifted on the news that the Organization of the Petroleum Exporting Countries in January had largely complied with an agreement to cut production.

Prices were firmed up by US National Security Advisor John Bolton’s warning that countries which buy Venezuelan resources including oil “will not be forgotten”.

Key figures around 0800 GMT

 Tokyo – Nikkei 225: FLAT at 21,139.71 (close)

Hong Kong – Hang Seng: DOWN 0.2 percent at 28,432.05 (close)

Shanghai – Composite: DOWN 0.1 percent at 2,719.70 (close)

London – FTSE 100: UP 0.4 percent at 7,216.26

Euro/dollar: UP at $1.1284 from $1.1270 at 2130 GMT Wednesday

Dollar/yen: UP at 111.06 yen from 111.02 yen

Pound/dollar: UP at $1.2860 from $1.2848

Oil – West Texas Intermediate: UP 47 cents at 54.37 per barrel

Oil – Brent Crude: UP 62 cents at $64.23 per barrel

New York – Dow: UP 0.5 percent at 25,543.27 (close)

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