Asian Markets Down on Trade Concerns, Australia’s Trade Surplus Exceeds Expectations

Asian stock markets are trading lower early Thursday, following a mixed trade in the U.S. session as renewed trade concerns offset strong gains in the technology sector.

Traders are taking a cautious approach after the Trump administration announced on Wednesday it is looking at the possibility of slapping a 25 percent tariff on $200 billion worth of imported Chinese goods, up from the initial 10 percent announced on July 10.

China responded by saying that blackmail will not work on them and that they would retaliate against the U.S. if additional trade measures are imposed.

Australian Economic News

The Australian Dollar is trading steady-to-lower following the release of its trade balance report.

According to the Australian Bureau of Statistics, Australia’s trade balance is at a surplus of $1.87 billion for June, marking a substantial increase from the $725 million surplus recorded in May. Exports were up three per cent for the month while imports were one percent lower.

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U.S. Economic Data

ADP Report

Private payrolls in the U.S. rose more than expected last month as companies used the boost from lower corporate taxes to hire more employees, ADP and Moody’s Analytics said Wednesday.

According to ADP, jobs in the U.S. increased by 219,000 in July, while economists polled by Reuters expected a gain of 185,000. July’s job gains were the best since February, when 241,000 jobs were added. Jobs growth for the previous month was also revised up to 181,000 from 177,000.

“The job market is booming, impacted by the deficit-financed tax cuts and increases in government spending,” said Mark Zandi, chief economist of Moody’s Analytics, in a statement. “Tariffs have yet to materially impact jobs, but the multinational companies shed jobs last month, signaling the threat.”

U.S. Construction Spending

U.S. construction spending recorded its biggest drop in more than a year in June as investment in both private and public projects fell, but spending for the prior months was revised sharply higher.

The Commerce Department said on Wednesday that construction spending fell 1.1 percent, the largest decline since April 2017. Data for May was revised up to show construction outlays rising 1.3 percent instead of the previously reported 0.4 percent gain. April’s outlays increased 1.7 percent instead of the previously estimated 0.9 percent. Economists were looking for a rise of 0.3 percent in June.

U.S. ISM Manufacturing PMI

U.S. manufacturing activity slowed in July amid signs that a robust economy and import tariffs were putting pressure on the supply chain, which could hurt production in the long term.

The Institute for Supply Management said its index of national factory activity fell to a reading of 58.1 last month from 60.2 in June.