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Asian markets drop as traders await next moves in China-US talks

WT24 Desk

HONG KONG – Asian markets fell on Friday as investors wound down for the end of the month, while awaiting news of progress on China-US trade talks but with optimism tainted by the row over Hong Kong, AFP reports.

Donald Trump’s decision to sign a bill in support of pro-democracy
protesters in the city and back their rights sparked warnings of retaliation
from Beijing and fuelled fears for negotiations on a mini trade deal that are
in their final straight.

However, China has not detailed what its response to the Hong Kong law
will be and observers say it is unlikely to do anything to derail a tariffs
agreement owing to its weakening economy.

“China’s threats to retaliate over the US Hong Kong law will probably
remain just that; threats,” said Jeffrey Halley at OANDA.

“China has its own issues, especially around corporate debt and regional
bank credit quality. It can ill-afford to waste any progress so far.
Pragmatism should overcome anger.”

Still, the threat of serious measures continues to weigh on sentiment and
with US markets closed for the Thanksgiving holiday, there were few catalysts to buy for Asian traders.

In early trade, Hong Kong was the biggest loser, dropping 1.6 percent,
while Shanghai fell 0.4 percent and Tokyo shed 0.1 percent by the break.

Singapore lost 0.4 percent, and Seoul dropped one percent after the South
Korean central bank decided against cutting interest rates despite the
economy struggling.

Taipei, Manila and Jakarta also retreated. However, Sydney and Wellington
posted gains.

“Markets are on a sort of ‘wait and hold’ in terms of that phase-one trade
deal,” David Riley of BlueBay Asset Management told Bloomberg TV.

“If there is a skinny deal, that will allow markets and risk assets to
grind higher even if there is no real prospect of a phase two or subsequent
detailed negotiation occurring this side of US Presidential elections.”

On currency markets, the pound held gains on expectations the ruling
Conservatives will win next month’s general election, allowing it to push
through Prime Minister Boris Johnson’s Brexit agreement and avoid a no-deal divorce from the European Union.

The Chilean central bank injected $20 billion into the economy in a bid to
support the ailing peso, which hit another record low Thursday. The South
American country has been hammered by the worst social unrest in three
decades, as well as a fall in the price of copper, of which Chile is the
world’s leading producer.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.1 percent at 23,377.59 (break)

Hong Kong – Hang Seng: DOWN 1.6 percent at 26,465.48

Shanghai – Composite: DOWN 0.4 percent at 2,879.36

Euro/dollar: UP at $1.1012 from $1.1008

Pound/dollar: UP at $1.2911 from $1.2909

Euro/pound: UP at 85.31 pence from 85.29

Dollar/yen: DOWN at 109.50 at 109.52 yen

West Texas Intermediate: DOWN four cents at $58.07 per barrel

Brent North Sea crude: DOWN 10 cents at $63.77 per barrel

New York – Dow: Closed for a public holiday

London – FTSE 100: DOWN 0.2 percent at 7,416.43 (close)

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