Asia stocks struggle despite Trump speech after sharp US losses
Hong Kong, (MILLAT ONLINE):Asian stocks struggled Wednesday as traders tracked sharp Wall Street losses despite a major speech by US President Donald Trump extolling his administration’s economic achievements.
In his annual State of the Union address, Trump said taxes had been slashed, jobs created and “the stock market has smashed one record after another”.
He also struck a conciliatory note, calling for Democrats’ support for a $1.5 trillion investment plan to renew the country’s creaking transport infrastructure.
But despite an initial positive ripple from the address, Asian bourses largely failed to shrug off a strongly negative Wall Street lead, where the Dow on Tuesday posted its largest decline since May.
In his speech Trump also called for “fair” trade and declared that “the era of economic surrender is over”.
“America has also finally turned the page on decades of unfair trade deals,” said Trump.
Although he did not name any country, Trump has often hit out at what he calls unfair practices in Asia, accusing Beijing of killing US jobs.
The Asian declines meant that, despite an overall upbeat January for equities, this week’s share sell-off continued into a third day.
Asian investors have locked in profits at the month-end and ahead of a series of key earnings reports and policy announcements.
Bearish sentiment was compounded by weak Chinese manufacturing data. Factory figures for January came in below expectations, hampered by crackdowns on debt and pollution levels.
Shanghai finished down 0.2 percent, while Seoul lost 0.1 percent and Singapore 0.4 percent.
Tokyo shed 0.8 percent to extend its losing streak for a sixth straight day.
Japanese tech firm Fujifilm announced 10,000 job cuts by March 2020 in its Fuji Xerox subsidiary, which it said was facing an “increasingly severe” market environment.
But there was positive news as Samsung Electronics reported a 73 percent jump in its fourth-quarter net profit, driven by demand for its memory chips and display panels, and Nintendo raised forecasts for net profit on strong Switch console sales.
Japan’s factory output also rose more than expected in December as production of automobile-related parts and other machines expanded.
Elsewhere, Hong Kong rose 0.9 percent, Taipei added 0.2 percent and Sydney gained 0.3 percent.
– Fed ‘hawkish’ fears –
In his annual address the US president touted a long bull run on Wall Street and improving growth rates, something the White House has dubbed a “Trump bump”.
But US stocks remain under pressure from a spike in Treasury bond yields, ahead of a Federal Reserve policy announcement that could signal an acceleration in interest rate increases this year.
“Rising bond yields head investors’ fears, as the possibility of interest rates rising quicker than expected has stoked concerns of an extended equities market purge,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
Greg McKenna, chief market strategist at AxiTrader, added of the Fed meeting: “No one expects a change in rates, but whether, and by how much, the Fed becomes a little more hawkish given US economic strength will be the key thing traders will be looking for in the statement that accompanies the decision.”
The dollar continued its recent slide following Trump’s speech, which failed to clear up last week’s confusion triggered by comments from the US treasury secretary that appeared to favour a weak greenback.
Ahead of the Fed meeting, European stocks rose, with London gaining 0.1 percent, Paris 0.2 percent and Frankfurt 0.8 percent in early trade.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: DOWN 0.8 percent at 23,098.29 (close)
Hong Kong – Hang Seng: UP 0.9 percent at 32,887.27 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,480.83 (close)
London – FTSE 100: UP 0.1 percent at 7,597.88
Euro/dollar: UP at $1.2446 from $1.2401 at 2200 GMT Tuesday
Pound/dollar: UP at $1.4184 from $1.4147
Dollar/yen: DOWN at 108.67 from 108.81 yen
Oil – Brent North Sea: DOWN 36 cents at $68.66 per barrel
Oil – West Texas Intermediate: DOWN 39 cents at $64.11 per barrel
New York – DOW: DOWN 1.4 percent at 26,067.89 (close)