SINGAPORE: Asian shares inched lower on Tuesday as caution reigned ahead of a potentially tense meeting between US President Donald Trump and his Chinese counterpart Xi Jinping later this week.
The dollar lost ground after investors sold stocks overnight and looked to safe havens as political uncertainty overshadowed positive US economic data and solid growth in global manufacturing.
European markets were also set for a subdued start, with financial spread-better CMC Markets predicting Britain’s FTSE 100 will open 0.1 per cent higher, and Germany’s DAX and France’s CAC 40 will start the day flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent.
Japan’s Nikkei slumped 1.1 per cent as automakers tumbled on weaker-than-expected US sales and investors sought out the safe-haven yen.
Toshiba Corporation, the worst performer on the index, tumbled 9.5 per cent after sources said the company will meet creditor banks on Tuesday to ask them to accept as collateral
shares in some of its businesses, including its soon-to-be split-off memory unit, in exchange for not calling in their loans.
Australian shares slid 0.3 per cent after the central bank voted to hold rates steady at a record low 1.5 per cent as expected, while pointing out that growth in household borrowing, largely to buy housing, is outpacing increases in household income.
Earlier in the day, the statistics bureau reported an expansion in the country’s February trade surplus to more than double the previous month’s as exports of gold and minerals rebounded, while imports dropped.
The Australian dollar was 0.3 per cent weaker at $0.7585.
China, Hong Kong, Taiwan and India were closed for holidays.
Adding to market jitters was an attack by a suspected Islamic suicide bomber on a metro train in St Petersburg, Russia, that killed 11 people and injured 45.
“Certainly a reaction had been seen towards the metro bomb at St Petersburg,” Jingyi Pan, market strategist at IG in Singapore, wrote in a note.
The meeting between Trump and Xi will also “have due influence upon Asian markets and I would not be surprised if traders choose to stay on the side-lines to ride out these events.”
Overnight, US stock indexes closed in the red, albeit having recovered some of the day’s losses, after Trump held out the possibility of using trade as a lever to secure Chinese cooperation against North Korea in an interview with the Financial Times on Sunday.
Last week, Trump tweeted that the highly anticipated meeting, which is also expected to cover differences over trade, North Korea and China’s strategic ambitions in the South China Sea, “will be a very difficult one.”
That has kept investors on edge, knocking riskier assets and forcing investors into safe assets such as the yen, gold and Treasuries.
Data showing US construction spending grew 0.8 per cent to $1.19 trillion, the highest since April 2006, failed to provide a sustained boost in sentiment, while a deceleration in US auto sales in March reinforced investors’ unease.
Manufacturers across Europe broadly and Asia had solid growth in March, making for a strong quarter overall, business surveys showed, but the rise of US protectionism is keeping both investors and companies wary.
— Reuters
Oman Observer is now on the WhatsApp channel. Click here
