* MSCI Asia ex-Japan -0.3%; Nikkei futures drop 0.6%
* Investors fear further escalation of tensions between the United States and China
* A global stimulus is observed that provides structural support for risky assets – Saxo
* Trump says closure of other consulates is possible
* Asian Stock Markets: tmsnrt.rs/2zpUAr4
By Andrew Galbraith and Elizabeth Dilts Marshall
SHANGHAI / NEW YORK, July 23 (Reuters) – Asian stocks fell on Thursday as investor concerns over mounting tensions between Washington and Beijing outweighed hopes of further stimulus, after the United States ordered the shutdown. from the Chinese consulate in Houston amid allegations of espionage.
China said the order was an “unprecedented escalation” by Washington, and a source said Beijing was considering closing the US consulate in Wuhan in retaliation.
United States President Donald Trump said other consulate closings were “always possible.”
After rising earlier in the morning session, the broader MSCI index of Asian stocks, excluding Japan, was down 0.3%, slowed by the fall in Chinese stocks. The Shanghai benchmark index fell 1.67% after four days of gains.
Australian stocks held flat and Hong Kong’s Hang Seng Index reversed past gains to lose 0.08%.
Nikkei futures lost 0.13% to 22,755, with Japanese markets closed for the holidays.
S&P mini futures were down 0.08%.
A further escalation of Sino-US tensions was increasingly likely, said Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore.
“The biggest short-term risk for me … is that Trump goes further and breaks the Phase One deal,” he said.
But he said unprecedented stimulus measures to boost pandemic-affected economies would continue to provide structural support for riskier assets.
“The liquidity forces are unmatched … we are seeing what happened after the GFC, but we are seeing it on steroids,” he said.
“It is rare that you see monetary and fiscal policy activated, and when they are activated they only activate a little bit.”
Hopes for yet another round of US stimulus and solid corporate earnings propelled Wall Street overnight, even as Republicans and Democrats remain separate as to how much to spend on the next round of coronavirus relief.
The Dow Jones Industrial Average increased 0.62%, the S&P 500 gained 0.57%, and the Nasdaq Composite added 0.24%.
In the commodity markets, spot gold fell 0.3% to $ 1,865.84 per ounce, but remained close to a nine-year peak on Thursday, with prices rising nearly 23% on the year. Investors have flocked to safe haven as they seek refuge from a possible reversal in US equities.
Gold has been helped by a weak dollar, which remained in the depression near the lows of more than four months on Thursday, falling 0.05% to 94,965. The dollar remained flat against the yen at 107.14 and against the euro at $ 1.1568.
Oil was also little changed, with stable US crude at $ 41.90 a barrel and world benchmark crude Brent up a penny to $ 44.30 a barrel. (Report by Andrew Galbraith and Elizabeth Dilts Marshall; Kim Coghill Edition)
.
