US probe of vehicle imports knocks Asian bourses

Prompting further uncertainty, Trump cast doubt on plans for an unprecedented summit with North Korean leader Kim Jong-un, saying on Wednesday that he would know next week whether the meeting would take place.

“There’s a lot of noise around Donald Trump, China-US trade, the auto imports now, and then the Korean summit, and all these things are just weighing on investors at the moment,” said Shane Oliver, chief economist & head of investment strategy, AMP Capital, Sydney.

“I think we probably would have seen a decent day in Asian markets were it not for these ongoing geopolitical worries because the minutes from the Fed’s last meeting were relatively benign.”

While the minutes from the Federal Reserve’s May 1-2 meeting indicated that policy makers expected another interest rate increase would be warranted “soon” if the US economic outlook remained intact, they helped to ease markets’ concern that the Fed would accelerate the pace of interest rate increases.

The two-year Treasury note yield, which rises with traders’ expectations of higher Fed fund rates, was at 2.5121% after touching 2.5970% on Wednesday.

The yield on benchmark 10-year Treasury notes fell back below the 3% threshold to 2.9825%, compared with its US close of 3.003% on Wednesday.

Analysts said that market uncertainty was prompting a clear flight to safety across financial markets.

The dollar was down 0.6% against the yen to ¥109.44.

“With Trump’s unpredictable behaviour leaving investors on edge, the Japanese yen has scope to appreciate further in the short term,” said Lukman Otunuga, an analyst at FXTM.

“However, a strengthening dollar on the back of heightened US rate hike expectations could limit the yen’s upside gains.”

The euro was up 0.1% on the day at $1.1709.

The dollar index, which tracks the greenback against a basket of six major rivals, was 0.2% lower at 93.839.

Signs of growth

Concern about trade, talks and tariffs overpowered indications of strong economic performance in two of the region’s major economies.

Confidence among Japanese manufacturers saw its first rise in fourth months, and service-sector sentiment rose to a record high in the latest Reuters Tankan poll, underscoring expectations that the Japanese economy will return to growth in the second quarter.

In South Korea, Finance Minister Kim Dong-yeon said the economy was on track for annual growth of 3% despite concerning indicators such as high youth unemployment.

The Bank of Korea held interest rates steady for a sixth straight month on Thursday, with inflation seen remaining below target and amid concerns a US-China trade war would hurt regional economies.

In commodities markets, US crude was down 0.2% at $71.68 a barrel. Oil prices fell on Wednesday after an unexpected rise in US crude and gasoline inventories.

Brent futures were 0.3% lower at $79.53 a barrel, continuing to move lower after rising above $80 for the first time since November 2014 last week.

The most-traded iron ore futures on the Dalian Commodity Exchange rose for the first time in six sessions on Thursday, gaining 0.3%.

Weak commodity prices continued to put pressure on Australian shares, which were 0.2% lower, extending losses into a sixth consecutive session. New Zealand’s benchmark S&P/NZX 50 index was 0.7% higher.

Gold was slightly higher. Spot gold was traded at $1,294.11 an ounce.

Reuters