Asian markets mostly up but trade war fears keep dealers on edge

Hong Kong - Asian equities mostly rose on Wednesday but investors struggled to sustain any meaningful recovery after the previous day's battering, with the shadow of a potentially damaging China-US trade war hanging over markets.

Shanghai and Hong Kong took the brunt of the sell-off on Tuesday after Beijing warned it would retaliate in kind to Donald Trump's threat of tariffs on hundreds of billions of dollars worth of Chinese goods amounting to a large proportion of its exports to the US.

The standoff follows weeks of fruitless talks between the world's two biggest economies, with the White House accusing China of a string of unfair practices including cyber-theft and forced technology transfers that are hurting American jobs and companies.

Tuesday's developments also surprised many traders who had characterised Trump's protectionist rhetoric to be part of a strategy to get a better deal with China.

Trump senior economic aide Peter Navarro continued the forceful language on Tuesday by saying China had more to lose from a trade war as it shipped more to the US.

He also maintained the administration was acting "to defend the crown jewels of American technology from China's aggressive behaviour".

However, he added the White House was open to talks but warned: "The fundamental reality is talk is cheap. Delay is expensive."

 'Sheer terror'

Stephen Innes, head of Asia-Pacific trading at OANDA, said: "Investors' complacency has given way to sheer terror as there can be very little doubt that the US and China have locked horns in a legitimate trade war as battle lines get drawn."

In early trade Hong Kong edged up 0.1% after dropping 2.8% on Tuesday, but Shanghai extended a 3.8% loss by giving up 0.4%.

Tokyo ended the morning marginally higher while Sydney gained 0.7%, Singapore edged up 0.1% and Seoul added 0.9%. There were also gains in Wellington, Taipei and Manila.

The dollar clawed back early losses against the yen but analysts warn it remains under pressure as investors look to the Japanese unit as a point of safety in times of turmoil.

Eyes are also moving to OPEC's crucial meeting as Saudi Arabia pushes with non-member Russia to lift an output ceiling that has supported oil prices for 18 months.

However, the two major producers are facing stiff opposition at the June 22-23 gathering from nations that have benefited from the increased revenues.

"It does seem like an increase is coming," said Greg McKenna, chief market strategist at AxiTrader. "The question is can such a move be achieved in order to balance the interests of OPEC's customers like the US and India while still holding the cartel together as a functioning group.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
16.39
(-0.28)
ZAR/GBP
21.19
(+0.32)
ZAR/EUR
19.14
(+0.48)
ZAR/AUD
11.53
(+0.15)
ZAR/JPY
0.16
(+0.14)
Gold
1869.40
(-0.52)
Silver
23.33
(-0.34)
Platinum
851.01
(-2.06)
Brent Crude
39.48
(-4.73)
Palladium
2193.00
(-2.25)
All Share
51896.97
(-0.79)
Top 40
47576.46
(-0.74)
Financial 15
9756.70
(-2.69)
Industrial 25
72681.12
(-0.25)
Resource 10
47826.96
(-0.63)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
23% - 133 votes
No, I did not.
51% - 290 votes
My landlord refused
26% - 151 votes
Vote