Asian markets fell in early trading Thursday, following Wall Street’s lead as the U.S. and China appeared to brace for a prolonged trade standoff.
After last week’s escalation of tariffs, no new trade talks have been scheduled, and many analysts suspect a breakthrough will require an intervention at the top before the Group of 20 major economies meets next month in Osaka, Japan.
“For a deal, there needs to be a Trump-Xi call, which would enable a useful Lighthizer visit to Beijing,” said Derek Scissors, a China specialist at the conservative American Enterprise Institute. “Then the two leaders could meet in Osaka and compromise on at least one major issue: reinvigorating the talks.”
The U.S. has imposed 25% tariffs on $250 billion in Chinese imports and is planning to target another $300 billion. It has also mounted sanctions against Huawei and is threatening to do the same with other Chinese companies. China, meanwhile, has retaliated against $110 billion in U.S. products.
“The stalemate between the U.S. and China looks likely to last longer as both sides continued to ratchet up rhetoric,” Zhu Huani of Mizuho Bank said in a commentary.
“Despite potential significant negative spillover effect this might have on U.S. firms, the Trump administration seems determined to curb China’s rise in technology advancement,” she added.
U.S. Treasury Secretary Steven Mnuchin is talking to Walmart
and other companies about finding ways to ease the pain if President Donald Trump goes ahead with plans to extend import taxes to the $300 billion in Chinese products that haven’t already been hit with tariffs, the Associated Press reported.
President Xi Jinping said China must prepare for difficult times, Reuters reported Wednesday, describing a “new Long March,” in which “we must overcome various major risks and challenges from home and abroad.”
fell 0.8% after a private survey suggested that manufacturing contracted in May. The Markit/JMMA flash purchasing managers’ index fell to 49.6 in May from 50.2 in the previous month. Numbers above 50 on the index show acceleration. Hong Kong’s Hang Seng Index
slid 1.3%, and the Shanghai Composite
retreated 0.9% while the smaller-cap Shenzhen Composite
dropped 0.6%. South Korea’s Kospi
slipped 0.2%, and benchmark indexes in Taiwan
were mixed. Australia’s S&P/ASX 200
Among individual stocks, SoftBank
tumbled in Tokyo trading after its U.K.-based ARM unit suspended business with Huawei. Sony
and Mitsubishi UFJ
also fell. In Hong Kong, Sunny Optical
and Country Garden
sank. SK Hynix
declined in South Korea, but LG Electronics
and Taiwan Semiconductor
slid in Taiwan. In Australia, BHP
On Wall Street, trade worries and mixed corporate earnings pulled stocks lower.
Minutes by the Federal Reserve had scant influence on trading. They showed that some central bank officials felt more interest rate hikes may be needed to keep low unemployment from triggering unwanted inflation.
The S&P 500 index
was down 0.3% at 2,856.27 and the Dow Jones Industrial Average
retreated 0.4% to 25,776.61. The Nasdaq composite
shed 0.5% to 7,750.84.
Benchmark U.S. crude
lost 36 cents to $61.06 per barrel in electronic trading on the New York Mercantile Exchange. It gave up $1.71 to settle at $61.42 per barrel on Wednesday. Brent crude
, the international standard, shed 42 cents to $70.57 per barrel. The contract slipped $1.19 to $70.99 in the previous session.
eased to 110.26 Japanese yen from 110.34 yen late Wednesday.
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