The major Asia-Pacific indexes are down across the board on Tuesday with renewed concerns over U.S.-China trade relations moving to the forefront of a list of concerns that includes a potential global recession and escalating tensions between the United States and Iran.
Investors appear to be shedding risk ahead of an expected meeting between US President Donald Trump and Chinese President Xi Jinping. They also seem none too hopeful that anything will come out of the meeting that could change the course of the lingering trade dispute between the two economic powerhouses. Furthermore, a senior U.S. official seems to have dampened any positive sentiment ahead of the meeting by saying Trump would be content with “any outcome”.
At 03:45 GMT, Japan’s Nikkei 225 Index is trading 21241.28, down 44.71 or -0.21%. South Korea’s KOSPI Index is at 2124.83, down 1.50 or -0.07% and Hong Kong’s Hang Seng Index is trading 28127.27, down 385.73 or -1.35%.
Australia’s S&P/ASX 200 is trading 6659.80, down 5.60 or -0.08% and China’s Shanghai Index is at 2953.38, down 54.77 or -1.82%.
The US futures indexes are also being dragged lower by the poor performances in Asia.
Senior U.S. Official Comments Dampen Investor Sentiment
The trade started flat in the U.S., which is understandable, given what investors have on the table this week regarding Iran, China and the U.S. economy. However, the price action suggested an equal amount of positioning by both longs and shorts. The early sentiment in Asia, however, indicates that sellers have gained the upper hand.
It’s not a bearish tone, per se, but rather one being dictated by long liquidation by those investors who want to avoid the pain of another steep sell-off, and aggressive short-sellers betting on the worst outcome.
There were no major developments on Monday between the US and Iran, and the US and China, however, there were comments from a senior U.S. official who seemed to throw water on any chance of a positive outcome from this weekend’s meeting between US President Trump and Chinese President Xi Jinping at the G20 summit in Osaka, Japan.
According to Reuters, the senior administration official, speaking to reporters on condition of anonymity, declined to give details about plans for the meeting, other than to say it would likely happen on the second day of the Friday-Saturday summit in Osaka.
“It’s really just an opportunity for the president to maintain his engagement as he has very closely with his Chinese counterpart. Even as trade frictions persist, he’s got the opportunity to see where the Chinese side is since the talks last left off,” the official said.
“The president is quite comfortable with any outcome,” the official added.
But investors don’t seem very comfortable especially since Trump said on June 6 he would decide whether to carry out his threat to hit Beijing with tariffs on at least $300 billion in Chinese goods after his meeting with Xi.
This article was originally posted on FX Empire
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