Asian stocks cheer Donald Trump's delay of some China tariffs; but unrest in Hong Kong continues to keep investors on edge

Tokyo: Asian stocks joined a global equities surge on Wednesday, after Washington delayed tariffs on some Chinese imports and gave much-needed relief for markets gripped by political and economic turmoil. In early European trade, futures for the pan-region Euro Stoxx 50 were up 0.15 percent, German DAX 0.17 percent and Britain’s FTSE 0.25 percent. The tariff news largely offset a raft of disappointing China data for July, although the safe-haven yen enjoyed a lift amid the deepening gloom in the world’s second-biggest economy. Wall Street stocks soared overnight as US President Donald Trump backed off his 1 September deadline for 10 percent tariffs on the remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods in the hopes of blunting their impact on US holiday sales. The surge in US stocks lifted MSCI’s broadest index of Asia-Pacific shares outside Japan. The Shanghai Composite Index advanced 0.6 percent while Hong Kong’s Hang Seng, which has been hurt by disruptions from large anti-government protests, rose 0.5 percent. [caption id=“attachment_6213601” align=“alignleft” width=“380”] File image of US President Donald Trump and Chinese President Xi Jinping. AP[/caption] South Korea’s KOSPI advanced 0.7 percent and Japan’s Nikkei rose 1 percent. Yet Wednesday’s bounce hardly clawed back the sizable losses for equities over recent months, and broad market sentiment remained fragile given that the US-China trade conflict is still far from resolved. Uncertainty around political risks such as the unrest in Hong Kong also continues to keep investors on edge. Kenta Inoue, senior market economist at Mitsubishi UFJ Morgan Stanley Securities, pointed out that Trump’s tariff delay came just as US stocks were stalling. “This appears to be a routine ploy by the US president, who applies trade pressure on China when stocks are doing well and opts for compromise when they are not,” Inoue said. The S&P 500 advanced to a record high at the end of July, but it has lost momentum due to factors including US-China trade angst. The index rose 1.5 percent on Tuesday, but is still down 1.8 percent in August. The year-long tariff dispute between the world’s biggest economies has already disrupted global supply chains and slowed economic growth. Growth of China’s industrial output slowed much more than expected to 4.8 percent in July from a year earlier, official data showed on Wednesday, in the latest sign of faltering demand as the United States ramps up trade pressure. July’s pace was the slowest since February 2002. “President Trump did delay the tariffs and while this is positive for equities, the markets will remain wary of the tariffs still being implemented come December,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. “And while the tensions in Hong Kong are not a main caliber theme for all markets, their negative impact has been multiplied as they have taken place simultaneously with developments in Argentina.” Fears of a possible return to interventionist policies, and by extension a possible debt default, jolted global markets this week after conservative Argentina President Mauricio Macri was handed a trouncing by the opposition in presidential primaries over the weekend.

In currencies, the safe-haven yen advanced 0.25 percent to 106.485 per dollar as the weaker-than-expected Chinese economic data reinforced the view that resolving the trade war was a long way off even with Trump delaying some additional tariffs.

In volatile trading, the yen retreated to 106.980 per dollar overnight before finding its footing. On Monday, the Japanese currency had brushed a seven-month peak near 105.000. The dollar index versus a basket of six major currencies was flat at 97.822 after advancing nearly 0.5 percent the previous day. The euro was steady at $1.1169 after slipping 0.4 percent against the dollar on Tuesday. The greenback’s advance stalled as the sharp rise in US yields seen overnight ran out of momentum. The 10-year US Treasury note edged down 2.5 basis points to 1.676 percent after climbing 6 basis points overnight. The yield had plumbed a three-year low of 1.595 percent a week ago. Crude prices soared as Washington’s decision to delay imposing some tariffs eased worries about a global economic slowdown, although Tuesday’s soft Chinese data cut short the rally. Brent crude oil futures were down 0.88 percent at $60.76 per barrel, losing steam after jumping nearly 5 percent the previous day.