Asian stocks open lower with trade talks and Fed meeting in focus

Economies.com
2019-07-31 04:17AM UTC

Asian stocks opened lower on Tuesday, with Japanese, Chinese and Australian stock indices falling, as well as Hong Kong's Hang Seng and South Korea's Kospi Index, while New Zealand's stocks rose on Wednesday following developments and economic data releases from Asian economies.

 

We have followed the China Federation of Logistics and Purchases (CFLP) survey of the manufacturing and service purchasing managers indexes, which reported contraction in the manufacturing sector to 49.7 versus 49.4 in the previous reading for June, beating expectations of contraction to 49.6, while the service sector contracted to 53.7 from 54.2 in June, worse than the expected 54.0.

 

This came ahead of the Australian economy's release of the second-quarter inflation data, which showed faster than expected growth, limiting further cuts in federal interest rates in Australia and supporting the performance of the Australian dollar, particularly against the US dollar as it rebounded from its lowest level. In six weeks, showing today's rise for the first time in nine sessions.

 

In addition, investors are focusing on the ongoing US-China trade negotiations in Shanghai, which began yesterday with the visit of a US trade delegation led by US Trade Representative Robert Lighthizer to China and will end today, which reflected the resumption of trade negotiations between the two largest economies in the world after it was suspended in May, which comes before we see later in the next month, a Chinese trade delegation visit to Washington.

 

US President Donald Trump expressed yesterday, via his Twitter account, that China's approach to trade talks was the worst in 27 years. Beijing was supposed to buy US agricultural products, but it did not comply. He added that the Chinese negotiators are continuing to change the agreements in their favor at the end of each discussion.

 

US President Trump also noted that the US trade delegation, which is resuming trade negotiations with the Chinese side, is currently in Shanghai for trade talks between the two sides, and that if Beijing does not abide by the agreements and discussions between the two sides and if Beijing continued its attempts to negatively affect the economy of the United States, then no agreement will be reached with China at all.

 

In the same context, markets are looking for the reveal of the monetary policy statement of the FOMC meeting on July 30-31 and the Commission's decision on interest rates amid expectations that federal monetary policy makers will cut federal funds rates by 25 basis points Between 2.00% and 2.25%, half an hour ahead of Fed Chairman Jerome Powell's upcoming press conference.

 

US President Trump said on Tuesday that the Federal Reserve was moving early and hasty and would like the Federal Reserve to stop tightening monetary policy and see a drastic cut in interest rates on federal funds, adding that he is not confident of accepting China's proposals during the ongoing trade talks.

 

Japanese stock indices saw a decline during today's trading session, with the broader Topix index falling by 0.69% to lose 10.85 points down to 1,564.73, and Nikkei 225 fell by 0.97% to lose 211.32 points, down to 21,497.99.

 

China's benchmark index, CSI 300 fell by 0.91% (35.40 points) to reach 3,834.92. The Shanghai index fell 0.73% (21.46 points) to reach 2,930.88.

 

Hong Kong's Hang Seng fell 1.24% (348.10 points) to 27.798.40, while South Korea's Kospi fell 0.89% (18.13 points) to 2,020.55.

 

To New Zealand's NZX 50 index, which rose by 0.40% (44.03 points) to 10,922.98. On the other hand, Australia's S&P/ASX 200 index shed 0.28% (19.18 points) and reached 6,825.90.

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