Asia Markets wrap

Hong Kong: Investors are watchful despite the rebound in Asian markets driven by the region’s economic recovery from the pandemic.

The sentiment is cautious after Wall Street’s sell-off overnight with geopolitical tensions lingering and amid fading hopes of another round of fiscal stimulus for the US economy.

The euro remained strong after the ECB meeting on Thursday kept rates on hold and the central bank indicated it is not intervening in the foreign currency market. But the British pound is under pressure after the EU gave the UK an ultimatum to drop plans to pass a law it views as controversial.

In Asia, Japan’s benchmark the Nikkei 225 edged up 0.55%, Australia’s S&P ASX 200 was down 0.7%, China’s CSI 300 benchmark climbed 0.73% and Hong Kong’s Hang Seng index added 0.73%.

This follows Wall Street’s losses, where the S&P 500 slipped 1.77%, the Dow Jones Average retreated 1.45% while the Nasdaq Composite dropped 1.99%.

The European Central Bank kept its rates unchanged as many expected but the euro strengthened after President Christine Lagarde reiterated at a press conference that the ECB does not target the exchange rate. The euro is up 0.2% at $1.18.

“President Lagarde used the press conference to send a slightly more positive message about the outlook for inflation and GDP growth, and dampened expectations of an early top-up to the €1.35trn PEPP envelope. We have penciled in an increase of €500bn for next March,” research firm Capital Economics said in a note.

Geopolitical clouds hover over markets. US President Donald Trump said there would be no extension of a deadline for the sale or closure of video streaming site TikTok, a lightning rod for tensions between US and China. “It’ll either be closed up or they’ll sell it. So we’ll either close up TikTok in this country for security reasons, or it’ll be sold,” Trump said while adding there would be no change in the September 15 deadline.

A Bloomberg report said the company likely needs beyond the US executive order ban on Sept. 20 to reach an agreement.  

Trump has said he wants a deal by Sept. 15, but the ban on TikTok’s operations in the US that he signed last month in a bid to force a sale requires the company to act by Sept. 20.

Call to review GNC deal

In sign of more pushbacks against Chinese companies, US Senator Marco Rubio, asked for a national security review of plans by General Nutrition Centers (GNC) to sell itself to Harbin Pharmaceutical Group.

In the week ahead central banks in Japan, Taiwan and Indonesia meet, with all of them likely to keep interest rates unchanged. China’s industrial production, retail sales, fixed asset investment, and home sales will also be in focus. ING Bank’s Greater China economist Iris Pang doesn’t see growth for these differing much from the pace in July.

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This report appeared initially on Asia Times Financial.

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