Asian shares tread water after mixed showing on Wall Street

Tokyo — Asian stocks struggled to gain traction on Friday, following a mixed Wall Street finish and as the worsening US-China trade dispute kept investors in the region cautious, despite signs of rapprochement between the US and Europe.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1%. The CSI300 of Chinese shares fell 0.5%. Japan’s Nikkei eked out a 0.1% gain, capped by fear that the Bank of Japan could scale down its asset purchase at its policy review next week.

MSCI’s gauge of stocks across the globe, the ACWI, hit four-month highs on Thursday, with European car makers’ shares gaining 2.6% after the EU and the US agreed to negotiate on trade, easing fear of a transatlantic trade war.

US industrial shares also made gains, rising 0.8% on Thursday, though the SP 500 index dipped 0.3% due to a 19% dive in Facebook on its earnings showing slowing usage.

While that pushed the Nasdaq composite down 1.01%, other US tech firms held firm, with Amazon.com shares gaining 3.2% in after-market trading following its stellar earnings.

The 10-year US Treasuries yield edged up to 2.984%, its highest level in about six weeks, on receding concern about trade tension.

And Asian shares were more subdued as trade disputes between Washington and Beijing have shown few signs of abating.

“Now that Washington does not need to use its energy to fight with Europe, it could increase pressure on China,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

So far this month, MSCI China A shares have fallen 2.6%, taking the biggest hit from US President Donald Trump’s threats on tariffs and other issues among major markets, compared to 3.3% gains in MSCI ACWI.

The Chinese yuan stayed near its 13-month low touched earlier this week.

The offshore yuan traded at 6.8283 to the dollar, near Tuesday’s low of 6.8448.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, fell to its lowest levels since May last year, having fallen 5.2% from a two year high hit in mid-May.

The euro traded at $1.1641, having fallen 0.73% on Thursday after the European Central Bank signalled no change in its timetable to move away from ultra low rates or end its bond purchase program.

The dollar slipped 0.2% to ¥110.98 as the yen got a lift from rise in Japanese bond yields. The 10-year government bond yield hit one-year high of 0.105%.

In commodities, oil prices extended their recovery, after Saudi Arabia suspended oil shipments through a strait in the Red Sea following an attack on two oil tankers.

Brent crude futures traded at $74.41 a barrel, down 0.17%, though they are up 1.9% so far this week.

US crude futures were almost flat at $69.55 a barrel.

Reuters