Risk Aversion Eases on Reports of Renewed Trade Talks Between US, China
Asian stocks finished lower on Thursday, following the lead set by the U.S. markets on Wednesday, but investors bought into the weakness, helping the major indexes pare substantial losses. The intraday short-covering rally was fueled by a report from China that it was planning for a new round of trade talks with the United States.
According to reports, Beijing said it had accepted an invitation from the U.S. to take part in trade negotiations in late August. The report went on to say that China’s vice commerce minister Wang Shouwen will lead the Chinese delegation in talks with U.S. officials. The meeting is expected to be an open dialogue with China expressing no interest in unilateralism and protectionism.
At 0506 GMT, Japan’s NIKKEI was trading 22168.19, down 36.03 or -0.16%. South Korea’s KOSPI Index was trading 2237.09, down 21.82 or -0.97%. China’s Shanghai Index was trading 2699.60, down 23.65 or -0.87% and Australia’s S&P/ASX 200 Index was 6316.60, down 12.40 or -0.20%.
Although the NIKKEI is trading lower, it did move about 0.13 percent higher after dropping more than 300 points lower earlier in the session.
U.S. Equity Markets
The major U.S. futures indexes were edging higher during the pre-market session early Thursday as investors reacted to the news about renewed trade talks with China and a softening of tensions over the financial turmoil in Turkey.
On Wednesday, U.S. stocks fell as declines in tech shares and weakness in shares of Macy’s encouraged investors to book profits and pare positions. The major index trimmed their losses late in the session after CNBC reported that the White House is preparing to expand rules favoring American products in government projects.
Technology stocks fell more than 1 percent as a disappointing quarterly report from Chinese tech giant Tencent weighed on investor sentiment. Investors were also driven to cut positions after Macy’s shares dropped nearly 16 percent as the company’s quarterly report showed it is struggling to grow sales. The company posted better-than-expected quarterly earnings and revenue, but it sales still fell on a year-over-year basis.
The U.S. Dollar is following through to the downside early Thursday against a basket of currencies after reversing to the downside late Wednesday from a 13-month peak. The dollar is being pressured by an easing of risk aversion and a bounce-back in emerging market currencies. The catalyst behind the shift in investor sentiment is a report that a Chinese delegation will travel to the United States late in August to hold trade talks.