Asian shares on defensive as new political worries sour mood

Saturday, 17 March 2018 00:00 - - {{hitsCtrl.values.hits}}

TOKYO (Reuters): Asian stocks were on the defensive on Friday as worries over the US investigation into the Trump Organization tested investor nerves, already frayed by fears US tariffs could hurt the global economy and trigger a trade war.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2% in early trade. Japan’s Nikkei was down 0.3%.

On Wall Street, the S&P 500 edged 0.08% lower on Thursday, marking its first four-day losing streak of 2018.

It hit a session low soon after the New York Times reported that US Special Counsel Robert Mueller had issued a subpoena for documents related to US President Donald Trump’s businesses.

That added to growing US political uncertainties following the recent departure of two key officials, former Secretary of State Rex Tillerson and top economic advisor Gary Cohn, from the Trump administration.

The report earlier this week that Trump is seeking to impose tariffs on up to $60 billion of Chinese imports cemented investor concerns that the administration is increasingly leaning towards protectionism.

“It seems as if for Trump, only ‘America First’ policies are left to boost his popularity and to get re-elected,” said Hiroko Iwaki, senior strategist at Mizuho Securities.

“It is hard to expect political uncertainties to disappear soon. That will underpin bonds,” she added.

US Treasuries yield stood little changed at 2.826% in Asia after having hit near two-week low of 2.797%.

In Europe, German Bund yield hit a six-week low of 0.566%.

Political uncertainties are not unique just to the United States. In Japan, Prime Minister Shinzo Abe is under pressure for suspicions of a cover-up in the government’s controversial land sale.

In the currency market, rising risk aversion pushed the dollar lower against the safe haven yen to 106.22 yen down 0.1% in early Asian trade.

The euro was little changed at $1.2303, having slipped 0.5% the previous day.

Oil prices were little changed after ending choppy Thursday trade higher as the International Energy Agency said global oil demand is expected to pick up this year, but warned supply is growing at a faster pace.

Brent futures stood flat at $65.11 per barrel.