Asia report: Markets drop as Saudi tension and trade war worries spook investors
Returning to face a new week after the last one saw the region’s indices face deep declines, Asian markets dropped again on Monday as they failed to follow Wall Street’s Friday recovery.
Japan’s Nikkei 225 was down 1.87% at 22,271.30 as the country’s financial sector took heavy losses, while the Japanese yen was up by 0.33% against the US dollar at JPY111.84.
The most notable faller on the Nikkei was SoftBank, whose shares dropped by more than 7% as investors worried about the conglomerate’s close links to Saudi Arabia, which is being subjected to growing international pressure over the disappearance of prominent journalist Jamal Khashoggi.
Stephen Innes, head of Asia and Pacific trading at OANDA, said: “Geopolitical embers are smouldering threatening to ignite the middle east powder over the disappearance of journalist Jamal Khashoggi.”
SoftBank owner Masayoshi Son has a strong business relationship with Saudi Crown Prince Mohammed bin Salman and the Middle Eastern kingdom provided nearly half the money for SoftBank's $93bn tech-focused Vision Fund.
Other financial stocks such as Mitsubishi UFJ and Mizuho Financial dropped by more than 1.50% while Uniqlo operator Fast Retailing and electronics giant Sharp also dropped.
On the Chinese mainland, the Shanghai Composite dropped by 1.49% to 2,568.10 and the tech-heavy Shenzhen Composite fell by 1.18% to 1,281.08 ahead of the release of the US Treasury report on the global economy.
It is understood that US President Donald Trump is keen for the report to condemn China for currency manipulation as the heated trade battle between Washington and Beijing rumbles on.
No end appears to be in sight as China’s ambassador to the US, Cu Tiankai, told Fox News on Sunday that there was no clarity in negotiations with the White House, adding that there was no sure indication of who was the final decision-maker in Trump’s administration.
“Honestly, I’ve been talking to ambassadors of other countries in Washington DC and this is also part of their problem,” said Tiankai.
Over in Hong Kong, the Hang Seng index fell by 1.38% at 25,445.06 as its technology sector was hit hard, with smartphone part manufacturer AAC Tech falling by more than 7% and social media and gaming giant Tencent falling by around 2%.
South Korea’s Kospi index was down by 0.77% at 2,145.12 at the close of trading after institutions quit their riskier assets.
Uncertainty has plagued the country’s market over recent weeks and index heavyweights also dropped, with Hyundai, Samsung Biologics, Celltrion and SK Hynix all slipping on Monday.
Brent Crude was up 0.91% at $81.17 and WTI increased by 0.70% to $71.84.
Australia’s S&P/ASX 200 fell by 0.99% to 5,837.10 as the country’s big four financial stocks of Commonwealth Bank of Australia, Australia and New Zealand Banking Group, National Australia Bank and Westpac all delivered declines, while fellow bank Suncorp also fell.
Mining and metals firms BHP Billiton, Evolution Mining, Fortescue Metals and South32 meanwhile dropped as metal prices slipped.
New Zealand’s S&P/NZX 50 was flat, dropping by 0.06% to 8,838.07 as shares in its largest listed building company, Fletcher Building, dropped after its offer for Steel & Tube was not warmly accepted.
Property stocks were the most active on Monday, with Precinct Properties New Zealand dropping 0.4% and Goodman Property Trust falling by 1.3%, while Kathmandu Holdings led the market lower with a 2.3% drop.
Meanwhile, Australia’s dollar was up against the greenback by 0.32% at AU$1.40, while New Zealand’s was up at NZ$1.53.