Asian shares shy from breaking new highs as trade mood darkens

Saturday, 30 November 2019 00:10 - - {{hitsCtrl.values.hits}}

FILE PHOTO: Passersby are reflected on a stock quotation board

outside a brokerage in Tokyo, Japan - REUTERS

TOKYO/HONG KONG (Reuters): Asian shares slipped on Friday, knocking a global stock index off its path to hitting an all-time peak as investors turned cautious, fearing a new US law backing Hong Kong protesters could torpedo efforts to end the US-China trade war.

MSCI All Country world index, which tracks shares in 49 countries, was down 0.39% at 548.48, less than 0.4% away from all-time peak hit in January last year before the start of US-China trade war.

European stocks look set to start Friday lower with pan-region Euro Stoxx 50 futures down 0.3% in early trade, following a bleak Asian morning session.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell more than 1%. Hong Kong led the dip with losses of 2%. South Korean shares lost 1.4% and Japan’s Nikkei eased 0.5%.

China’s blue-chips gave up 1.3% a day before the country reports manufacturing activity, which analysts polled by Reuters expect to have shrunk for seventh straight month in November.

Markets were sold off due to uncertainty over how US markets will perceive the latest clash between Washington and Beijing over Hong Kong.

Traders on Wall Street will commence a half-day session on Friday following Thursday’s Thanksgiving holiday. US S&P 500 mini futures were down 0.3%.

China warned the United States on Thursday it would take “firm counter measures” in response to US legislation backing anti-government protesters in Hong Kong.

Investors are now betting that while the US legislation spoils the mood, ultimately it remained in the interest of both Washington and Beijing to move forward with talks to get a trade deal.

Sentiment in the region has enjoyed an additional boost from a strong share performance this week by Alibaba Group, Asia’s largest firm by market capitalisation. Alibaba has risen as much as 16% since their IPO in Hong Kong on Tuesday.

Major currencies were kept in tight ranges amid a dearth of any other significant developments in Sino-US trade talks.

Against the yen, the dollar traded at 109.46 yen JPY=, near its six-month peak of 109.61 set on Wednesday.

The euro stood at $ 1.1009, stuck in a tight range for the past week.

The British pound traded at $ 1.2916, staying in its $ 1.28-1.30 range since mid-October.

As trading in major currencies slumbers, their implied volatilities, key gauges of expected swings measured by their option prices, plumbed to new record lows this week.

Among emerging currencies, the Chilean peso’s 3.5% plunge this week to an all-time low, and brought its decline during November to 10% following protests over inequality that turned violent again this week.

In response, the central bank said it would start a six-month program of foreign currency sales from Monday in a bid to stabilise the peso, earmarking $ 20 billion for the program.

Oil prices were little changed on Friday but look set to have one of the best performances in recent months in November, with Brent futures up almost 5.5% month-on-month, which would be the biggest gain since April.

US crude futures were little changed at $ 58.06 per barrel. They have risen more than 7% this month.