But later his economic adviser and trade hawk Larry Kudlow warned that stern measures were still being contemplated. “If the administration doesn’t understand what the president is trying to achieve from his trade policy, that is hardly a sign of confidence for investors,” said Stephen Innes, head of Asia-Pacific trade at OANDA. “It would be entirely natural if investors were a bit confused as indeed confusion reigns supreme.” Equity markets fluctuated through the day and Tokyo ended slightly lower at 22,270.39, while Shanghai closed 0.9% down at 2,786.90 but Hong Kong added 0.5% to 28,497.32 points at close yesterday.
Seoul and Manila both fell more than 1%, while there were also losses in Singapore, Taipei, Bangkok and Jakarta. Sydney rose slightly 0.3%. The yuan is also at its weakest level against the dollar since December, having endured one of its worst runs since its mid-2015 devaluation that sparked a global market meltdown. But speculation the People’s Bank of China is allowing the currency to weaken to offset the effects of any US tariffs were dismissed by Capital Economics. “While a weaker currency could offset some of the economic damage done by US tariffs, the wider risks to financial stability would not be ones worth taking,” the consulting firm said.
Investors were also spooked by reports of a leaked report by a government-backed think tank that warned of possible “financial panic” in the Chinese economy. Bloomberg News reported that the National Institution for Finance & Development had highlighted bond defaults, liquidity shortages and the equity market losses as being particular dangers as the country heads towards a US trade war. “We think China is currently very likely to see a financial panic,” the study, which appeared briefly on the Internet on Monday before being removed, was reported to have said. While broader markets are swinging, energy firms continued their rally after crude prices hit a new three-and-a-half year high on the back of data showing US stockpiles plunged by the most since 2016.
The news sent Brent up 1.7% and WTI more than 3% higher. The jump, which followed similar climbs on Tuesday, was aided by an outage at a key Canadian heavy-oil production facility as well as a US warning to allies that they would be hit with sanctions if they did not halt Iran oil purchases by November. While both contracts dipped Thursday, the latest oil gains provided further support to energy firms. CNOOC, Sinopec and PetroChina were all up in Hong Kong, while Woodside Petroleum jumped 1.8% in Sydney and Tokyo-listed Inpex climbed more than 1%.
Sources and photo-credits: AFP Gulf Times