ASIA MARKETS: Asian Shares Rise As Yuan Slides By The Most In 2 Years
July 20 2018 - 10:02AM
Dow Jones News
By Sue Chang, MarketWatch , Dow Jones Newswires
Trump threatens to impose tariffs on $500 billion in Chinese
imports
Asian stocks finished mostly higher Friday, aided by a drop in
the Chinese yuan against the U.S. dollar, but trade uncertainty
continued to weigh on global markets.
The Shanghai Composite Index climbed 2.1%, and Hong Kong's Hang
Seng rose 0.8%.
The Chinese yuan hit one-year lows against the dollar Friday
after Beijing guided its official exchange rate down by 0.9% to
6.7671 per dollar, the largest retreat in two years. The currency
has fallen 2.3% against the dollar in July.
A declining yuan makes Chinese exports less expensive for
foreign buyers, but rising protectionism around the globe could
limit the ability of export-driven companies to reap its full
benefits. The weaker yuan also makes it more difficult for Chinese
companies to service dollar-denominated debt.
"Uncertainty continues to plague markets at the moment with the
trade situation still about as unpredictable as it can be. But it's
becoming a lot harder to ignore the moves for China's currency in
the face of a potential currency war," strategists at Deutsche Bank
said in a note Friday.
The yuan's fall has elicited criticism from President Donald
Trump. He said in an interview Thursday
(https://www.cnbc.com/2018/07/19/trump-lays-into-the-fed-says-hes-not-thrilled-about-interest-rate-.html)
that increasing interest rates and a stronger dollar puts the U.S.
at a relative "disadvantage." The comments depart from a convention
in which U.S. presidents refrain from expressing views on the
dollar and monetary policy.
Market participants are anticipating an additional two rate
increases from the Fed this year.
A stronger dollar also reflects investor optimism over the state
of the U.S. economy and what has been a strong earnings season.
The U.S.-China trade spat has yet to make a tangible impact on
the U.S. economy, although concerns over escalating tensions have
weighed down investor sentiment.
President Donald Trump said that he was "ready" to impose
tariffs on up to $500 billion of Chinese goods. Earlier this week,
Trump reiterated his threat to raise tariffs on European autos
(https://www.wsj.com/articles/wilbur-ross-too-early-to-say-whether-national-security-probe-will-bring-auto-tariffs-1532009573?mod=article_inline),
which the European Union has warned would lead to retaliation.
Separately, Chinese authorities are expected to step up support
for semiconductor and other high-tech manufacturing sectors rather
than easing property regulations and increasing infrastructure
projects to bolster the economy, according to Dow Jones
Newswires.
In Tokyo, the Nikkei fell 0.3%. Japan's core consumer prices,
which exclude fresh food, rose 0.8% on-year in June versus May's
0.7%. However, excluding energy, the inflation index actually
slowed to 0.2% versus 0.3% in the previous month, according to Dow
Jones Newswires.
Korea's Kospi rose 0.3%, Australia's S&P/ASX 200 gained
0.4%, and Taiwan's Taiex advanced 0.9%.
(END) Dow Jones Newswires
July 20, 2018 09:47 ET (13:47 GMT)
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