Asian markets wobbled on Friday after Wall Street’s overnight misery. Growing concerns about the outcome of trade talks between the United States and China fueled the slide.
Japan’s Nikkei 225 fell 2% to close at 20,333.17 while South Korea’s Kospi slipped 1.2% to finish its trading week at 2,177.05.
The ASX 200 in Australia fared slightly better, dipping 0.3% to close at 6,071.5 and Hong Kong’s Hang Seng shed 0.2% after paring heavier early losses following the Chinese New Year holiday.
Shanghai, Shenzen and Taipei remained closed for the festive week.
“A bunch of balls remain up in the air regarding the trade war, the US shutdown and slowing global growth. So there is a high risk of a pullback from here,” Shane Oliver, the head of investment strategy at AMP Capital, told Bloomberg.
Before the markets in Asia had opened, the Dow Jones was in trouble, closing down by 220.77 points to 25,169.53 on Thursday. The S&P 500 shed just under 1% while the Nasdaq Composite slipped 1.2%.
News that US President Donald Trump had pushed back his planned meeting with China’s head of state Xi Jinping until after the March 1 trade war truce deadline dented investor confidence.
“In the short-run, the reason that we have this trade war is more to do with Trump’s base and his opinion polls”
“In the short-run, the reason that we have this trade war is more to do with Trump’s base and his opinion polls,” Steve Goldman, the managing director at Kapstream Capital, told CNBC.
“In a good portion of the country, this trade war rhetoric plays very, very well and … it supports [Trump’s] poll numbers,” he added. “[So,] Trump doesn’t really have a big incentive to settle this.”
At a media briefing at the White House, Trump told reporters he did not expect to meet Xi before next month’s deadline.
“Not yet,” he said when asked if a date had been penciled in. Asked if a meeting could happen before March 1, he said: “No.”
Trump has made it clear that resolving the trade dispute would depend on his crucial face-to-face chat with Xi.
But before that can happen, a broad outline for an agreement has to be worked out.
Earlier on Thursday, White House economic advisor Larry Kudlow warned that China and the US were still a long way from striking a deal, despite last month’s round of talks in Washington.
“Our long-held assumption is the US will eventually put a 25% tariff on all of its imports from China,” Joseph Capurso, a senior currency strategist at Commonwealth Bank of Australia, said in a note.
“In our assessment, the Chinese economy can absorb the tariff increases but it will cause the [country’s] economic growth to slow modestly,” he added.
Additional reporting by AFP