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Most Asian markets fall as traders consider Fed rate cut

WT24 Desk

HONG KONG – Most Asian markets fell in early trade Monday on dimming hopes for a deep interest rate cut by the Federal Reserve, but all the firms on a new tech-focused board in China rallied on its opening day, AFP reports.

Oil prices extended last week’s gains after Iran seized a British tanker
in the Gulf, fuelling fresh concerns about supplies and a possible conflict
in the tinderbox Middle East.

Traders took a step back after last week’s gains as the New York Federal
Reserve tempered comments from its president John Williams who had suggested the central bank would cut borrowing costs by 50 basis points at its policy meeting this month.

Bets that the Fed will only reduce rates by 25 points provided support to
the dollar against most high-yielding, riskier currencies.

On equity markets, Tokyo ended the morning 0.3 percent lower and Hong Kong was off 0.6 percent.

Shanghai fell 0.7 percent, with investors in China piling cash into
companies listed on the country’s new Nasdaq-style board.

Twenty-five stocks debuted on the Shanghai Stock Exchange’s Sci-Tech
Innovation Board — dubbed the STAR Market — in which listing and trading rules have been eased to help channel funding to start-ups.

Anji Microelectronics Technology (Shanghai) Co. was one of the stand-out
performers, soaring more than 300 percent

There will be no limits on price movements for the first five days of
trading, after which a daily 20 percent band is imposed. China’s main
exchanges are subject to a 10 percent band to contain volatility.

– Oil up on Iran worries –

Singapore, Manila and Jakarta were also lower, though Wellington and
Taipei edged up while Sydney and Seoul were flat.

There was some upbeat news for investors as China’s Xinhua news agency
said importers had started an arrangement to buy US agricultural goods, a
week after Donald Trump warned he could impose more tariffs if Beijing did not move quickly enough on the trade talks.

Trump and Xi Jinping agreed last month at the G20 to resume talks, with
the Chinese leader promising to buy more farming goods from the US.

“If we see China begin to follow through on their G20 sidelines promise,
we could see the US follow up with some leniency on Huawei,” said Edward
Moya, senior market analyst at OANDA. “Both sides don’t want to admit, but
they are politically motivated to wrap up this trade deal this year.”

On oil markets, both main contracts pressed high as tensions in the Gulf
were raised by Iran’s seizure of the UK-flagged tanker on Friday.

The news provided support against a weak global economic outlook and
concerns about demand.

“Falling global demand and rising US stockpiles have helped turn oil
charts very bearish, but that may not last as tensions remain high in the
Persian Gulf,” said Moya. “If Iran keeps on seizing tankers in the Strait of
Hormuz, the risks to military conflict will grow.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.3 percent at 21,407.31 (break)

Hong Kong – Hang Seng: DOWN 0.6 percent at 28,602.89

Shanghai – Composite: DOWN 0.7 percent at 2,903.72

Euro/dollar: DOWN at $1.1211 from $1.1216 at 2050 GMT

Pound/dollar: UP at $1.2503 from $1.2497

Dollar/yen: UP at 108.01 yen from 107.72 yen

West Texas Intermediate: UP 32 cents at $55.95 per barrel

Brent North Sea crude: UP 66 cents at $63.13 per barrel

New York – Dow: DOWN 0.3 percent at 27,154.20 (close)

London – FTSE 100: UP 0.2 percent at 7,508.70 (close)

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