Asia retreats on potential US trade curb against China
Asian shares fell for a second day on Thursday as weak earnings reports from megacap tech stocks deepened a sell-off on Wall Street and U.S. sanctions on Russia and China revived fears about geopolitics. Oil prices rose.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last down 0.3 percent, while Japan’s Nikkei 225 index fell 1.5 percent.
Chinese stocks fell 0.4 percent in Hong Kong after Reuters reported that the White House was considering a plan to restrict a series of software-backed exports to China in retaliation for Beijing’s recent rare earth export curbs.
“As Trump’s visit to Asia stirs geopolitical nerves, investors are turning defensive as there is no new macro data to support sentiment,” said Charu Chanana, chief investment strategist at Saxo Bank in Singapore.
“Rumors about the US restricting software exports to China hit tech sentiment right where it hurts, and renewed sanctions against Russia are a reminder that geopolitical risks are not going away.”
Global stock markets are falling to record levels with the start of corporate profit season. While megacaps’ results or outlooks have disappointed investors, most of the companies reporting so far have beaten analysts’ estimates.
South Korean stocks fell 0.2 percent after the Bank of Korea kept interest rates steady, as analysts surveyed by Reuters expected.
Brent crude was up 2.3 per cent at US$64 ($A99) a barrel after US President Donald Trump on Wednesday imposed Ukraine-related sanctions targeting Russian oil companies Lukoil and Rosneft for the first time in his second term. The move came on the same day that EU countries approved the 19th sanctions package against Moscow, which includes a ban on Russian liquefied natural gas imports.
U.S. inventories of crude oil, gasoline and distillates fell last week as refinery activity and demand strengthened, the Energy Information Administration said Wednesday.
S&P 500 e-mini futures rose 0.1 percent after a second day of overnight declines in U.S. stocks, as earnings reports from tech giants were underwhelmed by analysts on Wall Street. Netflix shares fell more than 10 percent on Wednesday as the streaming giant’s outlook for the coming quarter stunned investors.
Tesla shares fell 3.8 percent in after-hours trading after its earnings report missed analysts’ expectations despite record third-quarter revenue that beat estimates.
Apple shares fell 1.6 percent after the tech giant filed a complaint with EU antitrust regulators on Wednesday from two civil rights groups, alleging it violated key rules aimed at reining in Big Tech over the terms and conditions of its App Store and devices.
The yield on the US 10-year Treasury note was last held steady at 3.955 percent, up 0.2 basis points from the previous close of 3.953 percent.
Investors believe further policy easing by the Fed is almost certain. Fed funds futures show a 96.7 percent chance of a 25 basis point cut in interest rates at the U.S. central bank’s Oct. 29 meeting, according to CME Group’s FedWatch tool. That rate was 98.3 percent on Wednesday.
The US dollar index, which measures the dollar’s strength against a basket of six currencies, was last traded at 99.03, up 0.1 percent.
Gold was last down 0.6 per cent at US$4,071.09 ($A6,273.94) per ounce; Prices approached the US$4,000 ($A6,164) mark in early Asian trade as investors booked profits ahead of US inflation data due this week.
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