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James Hyerczyk
U.S.-China Trade Negotiations
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The major Asia Pacific stock indexes are down on Wednesday with Australia posting the only win. The markets are being pressured by weaker-than-expected economic data and renewed tensions over U.S.-China relations. At the same time, expectations of potential rate cuts from the Reserve Bank of Australia (RBA) and the U.S. Federal Reserve may be slowing the downside pressure or providing support.

At 08:33 GMT, Japan’s Nikkei 225 Index is at 21469.18, down 66.07 or -0.31 percent. Hong Kong’s Hang Seng Index is trading 28593.17, down 26.45 or -0.09 percent and South Korea’s KOSPI Index is at 2072.92, down 18.95 or -0.91 percent.

China’s Shanghai Index is trading 2931.69, down 5.92 or -0.20 percent and Australia’s S&P/ASX 200 Index is at 6673.30, up 32.30 or +0.49 percent.

Weakening Singapore Economy

Asian shares were being capped by weaker-than-expected economic data out of Singapore. Export’s dropped much more than expected in June. Non-oil domestic exports in June plunged 17.3% year-on-year, widely missing the expected 9.9% contraction forecast. Recently, Singapore’s gross domestic product for the second quarter also came in well-below expectations. Investors are now looking for Singapore’s central bank to ease monetary policy.


Investors Rattled by US-China Trade Tensions

It’s been more than two weeks since U.S. President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks between the two economic powerhouses. However, conditions haven’t improved much.

Last week, Trump said the Chinese haven’t fulfilled their end of the deal by buying U.S. agricultural products like soybeans. On Tuesday, Trump said that Washington and Beijing have a long way to go on trade, adding that America could place tariffs on an additional $325 billion worth of Chinese goods “if we want.”

Additionally, the two parties haven’t even met face to face, and a China hardliner has just joined its negotiations team. Conditions could get worse before they get better.

US Economy and Fed Chair Powell

The U.S. economy continued to show pockets of strength in June with retail sales advancing 0.4% last month, more than expected. But this didn’t stop Fed Chair Powell’s pledge to “act as appropriate” to keep the U.S. economic expansion going.

Oil Prices Pressured by Easing US – Iran Tension

The surprise event on Tuesday that could carry over to the global equity markets was the news that Iran was ready to negotiate regarding its missile program. Tensions between the US and Iran had been propping up prices for weeks. Without this support from speculators, prices could continue to plunge due to expectations of lower future demand.

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