Asian markets sink as Trump hints at delay to trade deal

Hong Kong, Dec 4 (AFP/APP): Asian investors extended a sell-off in global markets on Wednesday after Donald Trump poured cold water on the chances of a trade deal with China by the end of the year.

After weeks of broad optimism — and White House claims — that the economic superpowers were close to a partial agreement, the president said he could be happy to wait until after next year’s elections.

The comments, in London ahead of a tense NATO summit that has also fuelled geopolitical concerns, sent shivers through trading floors across Europe and New York, where dealers ran for the hills.

“I have no deadline,” Trump told reporters upon his arrival. “In some ways, I like the idea of waiting until after the election for the China deal.”

Investors were already on edge after the US reimposed stiff tariffs on Argentina and Brazil citing currency manipulation, then threatened to hammer France with 100 percent levies over the country’s digital tax.

US Commerce Secretary Wilbur Ross had also warned that more tariffs on Chinese goods planned for December 15 would be imposed if the first phase of trade talks was not completed by then.

Observers noted that Trump has in the past made statements on the issue that he has soon rowed back on, but there is a growing concern that the next round of China levies will be imposed.

A US House of Representatives vote to toughen the US position against China over its treatment of minority Uighurs, calling for sanctions against senior officials, will likely further complicate matters.

Beijing said the bill “wantonly smears” it.

The vote comes days after China announced retaliatory measures for Trump’s decision to sign a bill supporting Hong Kong democracy protests.

– ‘Tariff man is back’ –

“While the trade mood music can change very quickly, events over the past 48 hours have forced a reassessment in terms of what to expect before the end of the year,” said Rodrigo Catril at National Australia Bank.

“Tariff man is back and he has brought market volatility back to life.”

Markets were down across the board in Asia.

Hong Kong, Tokyo and Sydney all lost more than one percent, while Shanghai, Singapore, Mumbai, Taipei and Bangkok each shed 0.2 percent.

Seoul fell 0.7 percent, Manila slipped one percent and Jakarta sank 0.5 percent.

“It’s very difficult to have conviction about which way the trade situation will go,” Laura Kane at UBS Global Wealth Management told Bloomberg TV.

“Just a few weeks ago the news was incrementally positive, now we’ve moved more negative again, but the situation is going to stay in flux as we enter next year.”

Michael Hewson, chief market analyst at CMC Markets UK, added: “It should of course be noted that sentiment could well stabilise if some of the rhetoric of the last few days is walked back, a real possibility if stock markets continue to plunge, though the real test will come on or before December 15.”

The uncertainty sent investors running for safe-haven assets with the yen holding Tuesday’s gains against the dollar, while gold pushed towards $1,500 and its highest levels since 2013.

Higher-yielding, riskier currencies were down against the greenback with the Chinese yuan, South Korean won and Australian dollar among those suffering a sell-off.

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: DOWN 1.1 percent at 23,135.23 (close)
Hong Kong – Hang Seng: DOWN 1.1 percent at 26,111.77
Shanghai – Composite: DOWN 0.2 percent at 2,878.12 (close)
Euro/dollar: DOWN at $1.1075 from $1.1080 at 2200 GMT
Pound/dollar: DOWN at $1.2991 from $1.2997
Euro/pound: DOWN at 85.24 pence from 85.25 pence
Dollar/yen: DOWN at 108.58 from 108.63 yen
West Texas Intermediate: UP 43 cents at $56.53 per barrel
Brent North Sea crude: UP 51 cents at $61.33 per barrel
New York – Dow: DOWN 1.0 percent at 27,502.81 (close)
London – FTSE 100: DOWN 1.8 percent at 7,158.76 (close)