Asian markets decline amid growing geopolitical uncertainty

IC Markets Market Review
IC Markets Market Review

Global Markets:

  • Asian Stock Markets : Nikkei down 1.26%, Shanghai Composite down 0.77%, Hang Seng down 1.71%, ASX down 0.25%
  • Commodities: Gold at $1530.35 (+0.87%), Silver at $17.31 (+1.41%), Brent Oil at $58.37 (-0.34%), WTI Oil at $54.77 (-0.29%)
  • Rates : US 10-year yield at 1.640, UK 10-year yield at 0.488, Germany 10-year yield at -0.592

News & Data:

  • (JPY) Tertiary Industry Activity m/m -0.10% vs -0.10% expected
  • (CNY) Foreign Direct Investment ytd/y 7.30% vs 7.20% previous
  • (AUD) NAB Business Confidence 4 vs 2 previous
  • (JPY) PPI y/y -0.60% vs -0.50% expected
  • (NZD) FPI m/m 1.10% vs -0.70% previous
  • (USD) Federal Budget Balance -119.7B vs -120.0B expected
  • (CNY) M2 Money Supply y/y 8.10% vs 8.50% expected
  • (CNY) New Loans 1060B vs 1275B expected
  • EUR/USD Rate at Risk Ahead of US Inflation, Eurozone ZEW Data
  • German yield curve inverts as 10-year yield drops below 3-month yield

Markets Update:

Asian shares slumped on Tuesday as fears about a drawn out Sino-U.S. trade war, protests in Hong Kong and a crash in Argentina’s peso currency drove investors to safe harbours like bonds, gold, and the Japanese yen. Sentiment was already weak due to increasing signs that the United States and China will not quickly resolve their year-long trade war.

Markets were hit with further turbulence after protesters managed to close down Hong Kong’s airport on Monday. The protests began in opposition to a bill allowing extraditions to mainland China but have quickly morphed into the biggest challenge to China’s authority over the city since it took Hong Kong back from Britain in 1997. The Argentine peso collapsed overnight, falling to 55.85 to the dollar, after voters snubbed Macri by giving the opposition a surprisingly bigger-than-expected victory in Sunday’s primary election.

Chinese stocks fell 0.8%, while Hong Kong’s main market index tumbled more than 1.7% to a seven-month low. Japan’s Nikkei was also hit hard, down a sharp 1.26% and on course for its biggest daily decline in a week. Australian stocks, too, slipped by 0.25% as trade worries and political tensions made investors transition towards safe-haven assets.

Benchmark 10-year Treasury yields were near the lowest in almost three years, gold was pinned close to six-year highs, and the yen was within a whisker of a seven-month peak versus the dollar in a sign of the heightened anxiety in financial markets already battered by global growth woes. Treasury yields dropped across the board on Monday as. In Asia on Tuesday benchmark 10-year Treasuries yields fell to 1.64%. On August 7 yields had skidded to 1.5950%, the lowest since October 3, 2016. Spot gold rose 0.87% to $1.530.35 per ounce, near the highest in six years.

Oil prices edged slightly lower in Asian trading as expectations that major producers will continue to reduce supplies ran into worries about sluggish economic growth with the U.S. West Texas Intermediate futures falling 0.3% to $54.77 a barrel.

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