Asian shares dipped on Monday on fears of more protectionist measures from the United States while the dollar declined against major currencies after U.S. President Donald Trump criticized the Federal Reserve’s tightening policy.
Trump, on Friday, lamented the recent strength of the U.S. dollar and accused the European Union and China of manipulating their currencies.
The dollar index .DXY is so far up 2.4 percent this year led largely by Fed rate rises, strong macro-economic data and nervousness about a full-blown tariff war. It was last down 0.2 percent at 94.27, the lowest in more than two weeks.
Trump’s remarks on Friday, coupled with new threats to slap duties on all U.S. imports from China, triggered sell-offs in Wall Street and European stocks on Friday, despite good corporate earnings. [nL1N1UG076]
Asian stocks took Wall Street’s cue on Monday with MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS falling 0.2 percent. Japan’s Nikkei .N225 stumbled 1.4 percent, Australian shares and South Korea’s KOSPI index .KS11 fell 0.9 percent each.
Chinese shares also opened lower but quickly reversed their losses, with both the blue-chip index .CSI300 and Shanghai’s SSE Composite .SSEC up a touch.
“Although U.S. equities edged lower on Friday and the yen strengthened, most cross-asset moves are supportive of APAC equities – particularly dollar weakness, strength in emerging markets FX, and a dramatic bear steepening of global yield curves. Commodities are also mostly trading higher,” analysts at JPMorgan said in a note to clients.
Trump’s comments against Fed rate hikes helped steepen the Treasury yield curve.
Also playing a role in the global tick-up in yields was a Reuters report that the Bank of Japan was in unusually active discussions to modify its massive easing program. [nL4N1UG3OJ]
The BOJ, in turn, offered to buy an unlimited amount of five- to- 10-year Japanese government bonds on Monday. [nL4N1PS23K]
Benchmark 10-year JGB futures 2JGBv1, which had started lower on Monday, pared some of their losses on the announcement.
The Reuters report and the dollar’s weakness together added to the yen’s strength JPY=, which was last up 0.5 percent at 110.91 per dollar.
“Trade tensions remain a risk, but with an extended period until implementation (of the tariffs) and the next round of escalation, APAC equities are unlikely to respond much to Trump repeating threats already known,” JPMorgan added.
Investors are now looking ahead to an important meeting between Trump and European Commission President Jean-Claude Juncker.
“Trade tensions are likely to remain in the headlines as Juncker meets President Trump in Washington to discuss potential U.S. tariffs on European autos,” asset manager Insight Investment, which is owned by BNY Mellon, said in a note.
“It’s probably a little too early for the indirect impact of the U.S.-China trade issue to be showing up in the data. Nonetheless, the trade numbers that were released for Singapore and Japan were worse than expected.”
In Singapore, for example, exports rose 1.1 percent in the year to June compared with expectations of a 7.6 percent increase, while electronic exports slipped 7.9 percent. [nL4N1U900W]
Elsewhere, the euro EUR=EBS climbed for a third straight day to a two-week top of $1.1746. It was last up 0.1 percent at $1.1741.
In commodities, oil prices were held back by concerns over U.S.-China trade tensions and increased supply. [O/R]
U.S. crude CLcv1 was last off 16 cents at $68.1 a barrel after posting its third straight weekly loss. Brent LCOcv1 eased 17 cents to $72.90.
Spot gold was barely changed at $1,231.8 an ounce XAU=.
Reporting by Swati Pandey; Editing by Eric Meijer
WATCH: Saturday Night Live airs Christmas special — that’s just one giant dig at the Electoral College
NBC's "Saturday Night Live" aired an opening skit that was just one giant attack on the electoral college.
A snowman introduced the segment, saying that we could look in on the holiday table conversation thanks to hacked Nest cams.
The skit featured a house in San Francisco, California, a second in Charleston, South Carolina and a third in Atlanta, Georgia.
Each dinner table debated impeachment, and the differences between President Donald Trump and his predecessor, President Barack Obama.
But then the snowman said that none of their votes matter.
"They'll debate the issues all year long, but then it all comes down to 1,000 people in Wisconsin who won't even think about the election until the morning of," the snowman said. "And that's the magic of the Electoral College."
Georgia mayor being recalled for racism resigns from office: report
Hoschton Mayor Theresa Kenerly resigned in a special city council meeting held on Saturday, the Atlanta Journal Constitution reported Saturday.
"The resignation came just days after Councilman Jim Cleveland resigned saying he‘d rather leave office on his own terms than face voters in a recall election next month," the newspaper reported. "Both resignations follow an AJC investigation launched seven months ago into claims that an African American candidate for city administrator was sidetracked by Mayor Theresa Kenerly because of his race."
Nine 2020 Democrats unite to demand DNC Chair Tom Perez scrap debate rules: report
The Democratic National Committee is facing a revolt for the party's 2020 presidential candidates for its restrictive debate rules.
"Nine Democratic presidential candidates, including the party's front-runners, are urging the Democratic National Committee to toss out the current polling and fundraising rules used to determine who appears in televised debates and reopen the exchanges to better reflect the historic diversity of the current field. The candidates say the rules exclude diverse candidates in the field from participating," CBS News reported Saturday evening.