Asia stocks brush off Wall St slide after Trump’s comments
SINGAPORE, Aug 24 — Asian stocks edged up today, shaking off the risk aversion that gripped financial markets overnight after US President Donald Trump’s threat to shut down the government, though the US dollar remained sluggish.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.15 per cent in early trade.
Japan’s Nikkei pulled back 0.25 per cent on a stronger yen.
Overnight, US stock indexes closed between 0.3 per cent and 0.4 per cent lower.
Trump said at a Tuesday night rally in Arizona that he would be willing to risk a government shutdown to secure funding for a wall along the US-Mexico border. Those comments came ahead of a late-September deadline to raise the US debt ceiling or risk defaulting on debt payments.
Fitch Ratings said yesterday that a failure to raise the federal debt ceiling in a timely manner would prompt it to review the US’s sovereign rating “with potentially negative implications.”
While the dollar managed to limit losses yesterday in Asia following Trump’s comments, it resumed declines during the US day and failed to recover today.
The US dollar was little changed at 108.98 yen, having lost 0.5 per cent overnight.
The US dollar index, which tracks the greenback against a basket of six major peers, was steady early today, following the previous day’s 0.4 per cent slide.
Trump “is using one of his tricks to get what he wants and does not seem to care what could be the consequence of the US shutdown on the economy,” said Naeem Aslam, chief market analyst at Think Markets. “What matters the most for Mr Trump is to build the wall, which he promised throughout his campaign.”
Also undermining the US dollar were Trump’s threats to end the North American Free Trade Agreement, after three-day first-round talks that ended on Sunday failed to bridge differences.
Further rounds of talks will take place in September and later this year.
The Canadian dollar extended its gains, with the US dollar down 0.1 per cent at C$1.254, while the Mexican peso was marginally stronger at 17.681 to the dollar.
The euro was almost 0.1 per cent stronger after strong German and French manufacturing and services sector surveys yesterday.
Investors are also keeping a close eye on a central banking conference in Jackson Hole, Wyoming, which begins today, where Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are both due to speak, though they don’t expect any new policy messages.
“We are inclined to think that the Jackson Hole symposium will probably disappoint, with central bankers preferring to explain detailed actions in September,” Michala Marcussen, chief economist, and Guy Stear, head of emerging markets and credit research, at Societe Generale, wrote in a note.
In commodities, oil prices were steady and retained most of their recent gains made after US crude inventories declined for the eighth straight week.
US crude was little changed at $48.39 a barrel, after rising 2.2 per cent over the previous two sessions.
Global benchmark Brent was also flat at US$52.59 (RM225), after climbing 1.8 per cent in the past two days.
Gold was also steady at US$1,289.69 an ounce, retaining yesterday’s 0.4 per cent jump. — Reuters