SYDNEY / HONG KONG (Reuters) – Asian stocks held tight on Monday as concerns about rising tensions between the United States and China rose on sentiment, though signs of a recovery in industrial activity in the world’s second largest economy limited losses.
PHILO PHOTO: A pedestrian wearing a face mask walks over an intersection with an electronic board showing share information, following an outbreak of coronavirus (COVID-19), at the Lujiazui Financial District in Shanghai, China March 17, 2020 REUTERS / Aly Liet
European markets were set to open in positive territory, with EUROSTOXX 50 STXEc1 futures up 0.77% and FTSE FFIc1 futures up 0.71%, while E-mini futures for the S&P 500 index ESc1 0.19% climbed.
MSCI’s widest index of shares in Asia-Pacific outside Japan .MIAPJ0000PUS saw-sawed between red and green, remaining below a 6-1 / 2 month peak touched last week. Japanese and Singapore markets were closed for public holidays.
Investors were cautious after US President Donald Trump signed two executive orders banning WeChat, owned by Chinese tech giant Tencent (0700.HK), and TikTok in 45 days time while announcing sanctions on 11 Chinese and Hong Kong officials.
Rounding out the actions, U.S. regulators recommended that overseas companies listed on U.S. exchanges be subject to U.S. 2022 U.S. public audits.
“The bigger question for markets is whether these actions will jeopardize US-China trade talks on August 15 and will look closely at markets for each Chinese iteration,” said Tapas Strickland, director of markets and economics at National Australia Bank.
“The growing assumption in markets has been that President Trump needed the treatment of phase one to succeed, just like China, this side of the elections in November … At the same time, President Trump is running a hard China line in the elections , “Strickland added.
China’s blue chip CSI300 .CSI300 fell into the shadows and Hong Kong’s Hang Seng index .HSI fell 0.36% following the arrest of a high profile Hong Kong media tycoon under a new national security law.
While deteriorating Sino-US relations hung heavily on sentiment, data showing a slowdown in China’s manufacturing definition boosted hopes for economic recovery in the world’s second largest economy.
China’s industrial production is slowly returning to levels seen before the pandemic paralyzed enormous swathes of the economy, as growing demand, government stimulus and surprisingly strong exports are slowing recovery.
Australian stocks bought the trend to rise 1.68%, while the KOSPI index of South Korea .KS11 jumped 1.38%. The New Zealand benchmark index advanced 0.3%.
In currency, the dollar JPY = against the safe haven Japanese yen fell to 105.79, while the risk-sensitive Aussie dollar AUD = D3 nursed its losses after falling 1.1% on Friday. [FRX]
The British pound GBP = slightly rose to $ 1.3073 but was still below a five month high of $ 1.3185 touched last week. The euro was largely flat at $ 1.1789, after hitting its highest level since May 2018 last week.
That left the dollar index = USD at 93.35, after struggling on a slippery slope since the end of June.
Roads on the greenback are uncertainty over U.S. fiscal stimulus after President Trump signed a series of executive orders to extend unemployment benefits after talks with Congress broke down.
The orders would provide an additional $ 400 per week in unemployment benefits, less than the $ 600 per week previously passed during the crisis.
While analysts see the move as a cut in spending that leaves homeowners and tenants vulnerable to eviction, they are still optimistic about the prospect of more incentives.
“I see this as another step in negotiations rather than a halt to negotiations, with an as yet unknown timeline,” JPMorgan analyst Andrew Tyler wrote in a note.
“If we see the White House saying they no longer want to negotiate until after the election, then think we will see a wave of GDP downgrades, followed by lower realized spending and spikes in unemployment in September through the end of the year.”
In gold, gold slipped XAU = something to $ 2,029.20 an ounce after hitting a high of $ 2,072.5 last week.
Oil prices were higher with Brent crude LCOc1 up 43 cents to $ 44.83 a barrel. US crude CLc1 added 54 cents to $ 41.76.
Edited by Sam Holmes and Lincoln Feast
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