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Asia stocks fall on trade war fears

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People walk past a stock indicator showing share prices on the Tokyo Stock Exchange in Tokyo on July 13, 2018. Tokyo stocks opened higher on July 13 helped by a cheaper yen and rebounds on US markets. / AFP PHOTO / Kazuhiro NOGI

Asian markets mostly fell Thursday, as the US Federal Reserve chief’s upbeat assessment of the economy failed to allay concerns about a global trade war.

In his second day of congressional testimony on Wednesday, Federal Reserve Chairman Jerome Powell expressed optimism over the US economy.

But he warned that the spiralling global trade row was having a negative impact on companies in the US.

“We hear from our extensive network of business contacts a rising chorus of concerns,” he said.

US President Donald Trump has imposed steep tariffs on products from China worth tens of billions of dollars, and has threatened to target hundreds of billions more, on top of import taxes on steel and aluminium that have angered allies such as the EU.

“Powell was pretty straightforward on the risks from the trade policy uncertainty though he tried to stay out of the political debate,” said Greg McKenna, chief market strategist at AxiTrader.

The Fed chief said US businesses were already being hurt by reciprocal tariffs on key products, pointing out: “The bottom line is a more protectionist economy is less competitive, less productive.”

However, he also said that if Trump’s trade policy resulted in lower tariffs, that would be good for the US economy.

Hong Kong closed down 0.4 percent while Shanghai was 0.5 percent lower. Seoul fell 0.3 percent and Tokyo edged down 0.1 percent, snapping a four-day winning streak.

“Profit-taking emerged after four days of gains,” said Hikaru Sato, senior technical analyst at Daiwa Securities.

“But the decline was limited due to a weak yen and gains in US shares,” Sato told AFP.

Sydney gained 0.3 percent while Singapore rose one percent.

In a sign of worsening tensions over the trade dispute, a senior economic adviser to Trump attacked Chinese President Xi Jinping for blocking an agreement to resolve the issue.

“I think Xi is holding the game up,” said Larry Kudlow, director of the White House National Economic Council. “I don’t think President Xi has any intention of following through on the discussions we’ve made.”

– Oil reverses early gains –
European markets were steady at the start of trading, with Frankfurt flat while London and Paris inched down 0.2 percent.

Oil reversed minor gains made earlier on the back of data from the US Department of Energy which showed a fall in distillate stockpiles, including gasoline.

“The gasoline numbers were marginally optimistic enough to raise supply concerns”, said Stephen Innes, head of Asia-Pacific trading at Oanda trading group.

But investor fears that the US could tap its Strategic Petroleum Reserve in a bid to push down gasoline prices saw both main oil contracts fall.

Major producers led by OPEC kingpin Saudi Arabia have lifted a cap on production, which previously propped up crude prices following a global supply glut.

This has seen the commodity plunge to new lows this week.

– Key figures at 0820 GMT –
Tokyo – Nikkei 225: DOWN 0.1 percent at 22,764.68 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 28,010.86 (close)

Shanghai – Composite: DOWN 0.5 percent at 2,772.55 (close)

London – FTSE 100: DOWN 0.2 percent at 7,665.14 (open)

Dollar/yen: UP at 112.91 yen from 112.86 yen at 2030 GMT

Euro/dollar: DOWN at $1.1608 from $1.1639

Pound/dollar: DOWN at $1.3027 from $1.3069

Oil – Brent Crude: DOWN 37 cents at $72.53 per barrel

Oil – West Texas Intermediate: DOWN 26 cents at $68.50 per barrel

New York – Dow: UP 0.3 percent at 25,199.29 (close)


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