Hong Kong stocks are sharply down on uncertainty as tens of thousands of poeple block key roads in protest over government plans for a controversial extradition law (Anthony WALLACE)
Hong Kong (AFP) – Asian markets were mixed Wednesday after two days of healthy gains but Hong Kong sank more than one percent as a huge protest paralysed key roads in the city and a number of local businesses shut up shop.
While there was some profit-taking after the recent rises, investors are keeping their focus on developments in the China-US trade saga and an expected meeting between Donald Trump and Xi Jinping at the G20 summit in Japan this month.
The US president repeated on Tuesday that he expects to hold a face-to-face with his Chinese counterpart on Osaka and said Beijing wanted a deal “very badly”.
US Commerce Secretary Wilbur Ross tempered expectations the leaders would reach an agreement by saying the meeting could lead to progress but not a “definitive agreement”. However, he said he was confident an agreement would be reached eventually.
The comments out of Washington were keeping traders on edge, though a broad narrative of central bank easing — with the Federal Reserve tipped to begin cutting interest rates and the European Union sticking to a softer outlook — is providing much-needed support.
“While there was only a sliver of hope a deal would get done before the G20, (Trump’s) comments hardly suggest he’s heading to Osaka in the most agreeable spirits,” said Stephen Innes, managing partner at Vanguard Markets.
“Investors are clinging on to hope, buttressed by significant central bank backstops, that the G20 can somehow pull a rabbit out of the hat and as such don’t want to be caught short if the event produces a (trade) deal.”
Tokyo went into the break 0.1 percent higher, Sydney and Singapore each added 0.2 percent, and Wellington put on 0.1 percent.
– Oil prices tumble –
But Shanghai eased 0.2 percent, Seoul shed 0.1 percent and Taipei retreated 0.2 percent.
Hong Kong sank 1.3 percent after climbing more than three percent in the previous two days, though adding to the selling mood were demonstrations in the city by tens of thousands of people against government plans for a controversial extradition law.
Major thoroughfares were blocked by the protests as lawmakers prepared to debate the bill, which would allow extraditions to China and that many fear will hammer Hong Kong’s reputation as an international business hub.
Transport, social work and teaching unions have either called on their members to not go to work or encouraged them to attend the protests, while a bus drivers’ union said it would call on staff to drive slower than usual.
“Uncertainty on local policies will confuse investors and affect the flows in and out of Hong Kong stocks,” Ronald Wan, chief executive of Partners Capital International, told Bloomberg News.
“Investors now need to ponder whether or not to pull out of the market given the local events and global factors including the trade war.”
On oil markets both main contracts sank more than one percent after US data pointed to a jump in US stockpiles, exacerbating worries about oversupply and weakening demand.
“Oil prices have struggled to retain bullish gains as traders stay cautious over heightened geopolitical risks and persistent weakness in the global economic backdrop,” said Benjamin Lu, commodities analyst with Phillip Futures in Singapore.
Lu and other analysts said oil prices are getting support from expectations that OPEC and Russia would agree to extend output cuts beyond June during a meeting later this month.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 21,223.36 (break)
Hong Kong – Hang Seng: DOWN 1.3 percent at 27,416.18
Shanghai – Composite: DOWN 0.2 percent at 2,919.23
Euro/dollar: UP at $1.1330 from $1.1328 at 2040 GMT
Pound/dollar: DOWN at $1.2720 from $1.2723
Dollar/yen: DOWN at 108.49 yen from 108.51 yen
Oil – West Texas Intermediate: DOWN 87 cents at $52.40 per barrel
Oil – Brent North Sea: DOWN 88 cents at $61.41 per barrel
New York – Dow: DOWN 0.1 percent at 26,048.51 (close)
London – FTSE 100: UP 0.3 percent at 7,398.45 (close)
Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.