Lukewarm recovery for Asia stocks

Tuesday, 28 May 2019 00:00 - - {{hitsCtrl.values.hits}}

HONG KONG, AFP: Asian markets made a tepid recovery Monday as investors sought to shrug off a difficult week dominated by anxiety over the fractious US-China trade war.

As the two economic superpowers ready for a prolonged battle, with no date set for tariff negotiations to resume, all eyes were on US President Donald Trump’s visit to Japan, where he held formal talks with Prime Minister Shinzo Abe on Monday.

Ahead of the talks, Trump hit out at the “tremendous imbalance” in trade with the US ally, but said he was confident that things would “work out over a period of time”.

He also said that there was a “very good” chance of clinching “a great trade deal” with China “sometime in the future”.

On the geopolitical front, the US leader reiterated his criticism of the nuclear deal with Iran but emphasised that Washington was “not looking for regime change” and was open to holding negotiations with Tehran.

In Asian markets, Tokyo rose 0.3%, while Shanghai closed 1.4% higher. But Hong Kong lost 0.2%, while Singapore edged down 0.1%.

The cautious recovery in Asia came after the Dow retreated for the fifth straight week, its longest losing streak since 2011.

Investors were expected to welcome a three-day weekend that saw US and UK markets closed on Monday, with the resignation of British Prime Minister Theresa May raising the likelihood of a no-deal Brexit.

The strong show of support for the Brexit Party in the European elections over the weekend will do little to ease those fears, analysts said.

“The problems that Theresa May faced will not go away with a new leader. In fact, they may get worse, because this weekend’s election shows a large proportion of voters out there are still adamant they want a Brexit and don’t seem minded to negotiate with Brussels,” said OANDA Senior Market Analyst Jeffrey Halley.

The results of the vote “should highlight how fractured both Parliament and the British electorate remain. The new Prime Minister will face the same issues – including a non-majority in Parliament – as his or her predecessors”, Halley added.

In a further blow to Brussels, the far-right National Rally party led by Marine Le Pen made a strong showing in France, leaving pro-EU President Emmanuel Macron trailing.

While London was closed for a bank holiday, Paris and Frankfurt each gained 0.9% in early trade.

Oil prices inched down after suffering a sudden rout last week due to a surprise increase in US crude and gasoline inventories.

Despite the OPEC output cap as well as US sanctions against Iran and Venezuela putting pressure on supplies, jitters over the US-China trade war have dampened future demand, keeping prices on the lower side.