Stocks tick lower ahead of U.S.-China 'Phase 1' trade deal signing

Stocks tick lower ahead of U.S.-China 'Phase 1' trade deal signing

Reuters  | Jan 15, 2020 06:17

Stocks tick lower ahead of U.S.-China 'Phase 1' trade deal signing

By Tomo Uetake

TOKYO (Reuters) - Stocks slipped in Asian trade on Wednesday as investors awaited the signing of an initial U.S.-China trade deal, with sentiment somewhat dented by comments from the U.S. Treasury Secretary that tariffs would remain in place for now.

European shares were expected to follow suit, with major European stock futures (STXEc1) (FDXc1) (FFIc1) trading down around 0.2-0.3%.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 0.48%, retreating from its 19-month peak marked on Tuesday, and Japan's benchmark Nikkei (N225) shed 0.5%, off its four-week high hit the previous day.

South Korea's KOSPI (KS11) dropped 0.54% and China's Shanghai Composite (SSEC) and Hong Kong's Hang Seng (HSI) shed 0.65% and 0.74%, respectively, while Australian stocks (AXJO) bucked the trend to climb 0.47% on the back of stronger mining shares.

Treasury Secretary Steven Mnuchin said late on Tuesday that the United States would keep in place tariffs on Chinese goods until the completion of a second phase of a U.S.-China trade agreement, triggering some profit-taking in risk assets.

The news came hours before the signing of a preliminary trade agreement to ease an 18-month-old trade war between the world's two largest economies.

Wall Street stocks dipped on Tuesday, reversing earlier intraday record highs, after media reported the United States would likely maintain tariffs on Chinese goods past November's presidential election. [.N/C]

"We should not expect further tariff relief until after the November presidential elections, suggesting today's agreement is probably as good as it gets for 2020," said Tapas Strickland, director of economics at National Australia Bank in Sydney.

Mnuchin's comment didn't come as a total surprise to the market and the underlying sentiment should remain intact, he added.

U.S. Treasury yields ticked down as investors took stock of weaker-than-expected consumer prices and the expected signing of the interim trade deal, with the benchmark 10-year note yield falling to 1.802% (US10YT=RR). [US/]

Markets were also weighing the impact of the U.S. government nearing publication of a rule that would vastly expand its powers to block shipments of foreign-made goods to China's Huawei, as it seeks to squeeze the blacklisted telecoms company, two sources said.

"I think the Trump administration will continue to put pressure on China in this way or some other, even after signing a Phase 1 deal," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance in Tokyo.

In the currency market, the Japanese yen, often perceived as a safe haven, reversed Tuesday's losses against the dollar as news U.S. tariffs would remain on Chinese goods through the U.S. election hurt risk sentiment.

The yen was last changing hands at 109.92 yen to the dollar, a shade firmer on the day, after hitting its weakest level in nearly eight months of 110.22 yen the previous day.

The euro was last traded at $1.1133 (EUR=) and the dollar index against a basket of currencies stood at 97.339 (DXY), both little changed on the day.

The offshore yuan weakened to 6.905 per dollar, one day after rising to its strongest level in six months of 6.865.

China's central bank extended fresh short- and medium-term loans on Wednesday but kept the borrowing cost unchanged, as it seeks to maintain adequate liquidity in a slowing economy.

Oil prices slipped on Wednesday on worries that the pending Phase 1 trade deal between the world's two biggest crude users may not lead to more fuel demand as Washington keeps tariffs in place. [O/R]

Concerns about increasing supply also pressured prices after a government report on Tuesday said output from the United States will increase in 2020 by more than previously forecast.

Brent crude (LCOc1) dropped 0.16% to $64.39 per barrel and U.S. West Texas Intermediate crude futures (CLc1) were down 0.17% at $58.13 a barrel.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
uPleasure uPleasure
uPleasure uPleasure

All eyes one the Phase 1 deatils deal. Hope it's a good one and benefit to everyone..  ... (Read More)

Jan 15, 2020 10:46 GMT· Reply
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+