U.S. Stock Market Weakness Spills Over to Asian Session

The major Asian stock indexes are trading mostly lower on Friday on renewed worries over U.S.-China trade relations. The growing concerns were fueled by comments from a U.S. trade official who felt the two economic powerhouses were still far away from striking a trade deal despite recent optimistic remarks from the Trump administration, and a report that an upcoming meeting between U.S. President Trump and China’s President Xi Jinping would be pushed into March.

At 04:03 GMT, Japan’s NIKKEI is trading 20384.26, down 367.02 or -1.77%. Hong Kong’s Hang Seng Index is at 27841.23, down 148.98 or -0.53% and South Korea’s KOSPI is at 2178.73, down 24.69 or -1.12%.

Australia’s ASX 200 is at 6060.00, down 32.50 or -0.53%. China’s Shanghai Index remains closed due to the Lunar New Year holiday.

Traders are also responding to another downgrade of a major economic region as well as dovish remarks from the Reserve Bank of Australia.

In the U.S. on Thursday, the major stock indexes retreated after White House economic advisor Larry Kudlow said that China and the U.S. were still far away on striking a trade deal. Later in the session, stock weakened further after CNBC reported that the Trump-Xi meeting before the March 2 deadline was “highly unlikely.”

U.S. equity indexes were under pressure before the opening bell on Thursday after the European Commission sharply cut its forecasts for Euro Zone economic growth this year and next on expectations the bloc’s largest countries will be held back by global grade tensions and domestic challenges. The Commission said Euro Zone growth will slow to 1.3 percent this year from 1.9 percent in 2018, before rebounding in 2020 to 1.6 percent.

Earlier in the session, the Reserve Bank of Australia (RBA) may have telegraphed a rate cut for later in the year when it made a substantial downward revision to its growth forecasts in its quarterly Statement of Monetary Policy (SoMP).

U.S. Equity Market Recap

The major U.S. stock indexes fell sharply on Thursday in reaction to the EU downgrade, Kudlow’s remarks on U.S.-China trade negotiations and the delay of the Trump-Xi meeting.

In the U.S. cash market, the benchmark S&P 500 Index settled at 2706.05, down 25.56 or -0.97%. The blue chip Dow Jones Industrial Average closed at 25169.53, down 220.77 or -0.90% and the tech-driven NASDAQ Composite finished at 7288.35, down 86.93 or -1.24%.

The news about China drove investors to dump shares of companies seen as bellwethers for global trade given their exposure to overseas market. Shares of Caterpillar and Deere dropped more than 1 percent, while Boeing fell 0.9 percent.

In other earnings news, Twitter reported quarterly earnings that beat analyst expectations on Thursday. However, shares fell after the company issued light guidance. Better-than-expected earnings were posted by Fiat Chrysler and Cardinal Health.