Asia report: Markets finish weaker as geopolitical tensions worsen
Markets in Asia finished in the red on Friday, with bourses in China extending their losses significantly, as tensions between Washington and Beijing worsened further.
Traders in Japan had a second day off for ‘Health and Sports Day’, as the yen weakened 0.51% against the dollar to last trade at JPY 106.32.
On the mainland, the Shanghai Composite lost 3.86% to 3,196.77, and the smaller, technology-heavy Shenzhen Composite was 5% weaker at 2,138.36.
Renminbi was ending what looked to be its worst week in two months, according to Reuters, as China-US relations continued to deteriorate, with the offshore yuan last trading 0.15% weaker at CNY 7.0145.
South Korea’s Kospi slipped 0.71% to 2,200.44, while the Hang Seng Index in Hong Kong slid 2.21% to 24,705.33.
Technology stocks were in the red in the special administrative region, following a sell-off among the big tech plays on Wall Street overnight, with Alibaba down 3.08% and Tencent losing 5.21%.
The blue-chip tech stocks were in the green in Seoul, however, with Samsung Electronics up 0.81%, and chipmaker SK Hynix rising 1.58%.
Tensions between the US and China remained at the top of the agenda on Friday, after China confirmed that it had ordered the shuttering of the US consulate in Chengdu
That was in retaliation to a similar order from the US which saw the Chinese consulate in Houston closed earlier in the week.
US Secretary of State Mike Pompeo blasted China in a speech overnight, saying Washington would no longer tolerate what he described as Beijing’s attempts to seize global order.
“The truth is that our policies, and those of other free nations, resurrected China’s failing economy, only to see Beijing bite the international hands that fed it,” Pompeo said in his address in California.
Rony Nehme, chief market analyst for SquaredFinancial, said the losses in Asia were paced by the sharp sell-off in China, which he put down to the escalating US-Sino tensions.
“President Trump commented that the US-Sino phase one trade deal ‘means less to me now than when I made it’, given China's role in Covid-19," Nehme commented.
“Pompeo's speech was also notable for its bellicose rhetoric against China.
“We feel that equites are on the precipice of a move lower over the next couple of sessions as a result of the above-mentioned conditions.”
Oil prices were higher as the region entered the weekend, with Brent crude last up 1.15% at $43.81 per barrel, and West Texas Intermediate adding 1.19% to $41.56.
In Australia, the S&P/ASX 200 lost 1.16% to 6,024.00, as both the hefty financials subindex and the energy sector saw heavy losses.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.49% at 11,636.26, led lower by Kiwi Property Group, which was off 3.7%, leading the property sector into the red.
Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.3% at AID 1.4129, and the Kiwi retreating 0.18% to NZD 1.5099.