The growing trade war talk between the world’s largest trading nations continued to take effect, as Asian stocks hit a fresh six month low in last nights trading.
Asian shares fell after signs the trade war talk between the US, China and many other countries is starting to have an affect upon corporate profits. The trade war talk is causing a risk-off sentiment among investors who have been seeking safe haven investments in Gold and Bonds.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell by 0.35 percent at one point during a lively Asian trading session, hitting its weakest mark since early December 2017 before staging a strong rally to close up 0.15 percent. However, even with its late rally erasing Friday’s losses, the index is 2.3 percent lower for the week overall.
Hong Kong’s Hang Seng Index hit a fresh six-month low, falling 3.9 percent for the week overall. South Korea’s KOSPI suffered even more, hitting a nine month low. Meanwhile, in mainland China, the CSI300 index saw a weekly loss of almost 5 percent, plummeting to a new one year low. In Japan, the world’s third largest economy, the Nikkei 225 closed down 0.8 percent, which meant a weekly loss of 1.7 percent.
There are many investors that still hope the US and China can end the trade war talk and agree upon a deal before July 6th, when the first round of U.S. tariffs on Chinese goods as well as retaliatory tariffs by China are due to take effect, However, there are now a growing number of investors and market analysts that see diminishing hopes of an early compromise between the world’s two largest economies.
Daisuke Uno, chief strategist at Sumitomo Mitsui Bank said: “If the U.S. puts more pressure on China with tariffs, I would suspect the Chinese authorities would like to drive the yuan lower to mitigate the impact.”