Asia-Pacific stocks fall as Trump cools on China trade deal

Asia-Pacific stocks slipped on Wednesday after comments from US president Donald Trump suggested he is in no rush to strike a deal with China, fuelling investors’ fears over global trade tensions.

Australian equities posted the biggest fall in the region, with the S&P/ASX 200 sliding 1.7 per cent to a near two-month low as miners dropped. China is a major market for Australian commodities. 

Hong Kong’s Hang Seng fell 1.2 per cent to an eight-week low as a private survey showed that business activity sank to a 21-year low as anti-government protests entered their sixth month.

The CSI 300 of Shanghai- and Shenzhen-listed stocks dipped 0.3 per cent after the Caixin-Markit services purchasing managers’ index showed the services sector grew in November at its fastest rate this year. Japan’s Topix edged 0.6 per cent lower and South Korea’s Kospi was down 1.1 per cent.

Mr Trump declared on Tuesday that he was prepared to wait until after the US presidential election next year to reach a trade deal with China, claiming that there was no deadline for an agreement.

“In some ways I like the idea of waiting until after the election,” he said on a visit to London, a day after threatening tariffs on Europe and Latin America.

“President Trump has dashed hopes of a phase one trade deal by mid-December and also hinted at ‘no deal’ until after [the] 2020 elections, implying a prolonged uncertainty well into the next year,” wrote economists at investment bank ING on Wednesday.

A new round of tariffs on $156bn worth of Chinese goods is set to come into force on December 15 if Washington and Beijing fail to seal a preliminary trade deal.

Mr Trump’s comments rattled Wall Street overnight with the S&P 500 ending Tuesday 0.7 per cent lower. The yield on 10-year US Treasuries rose 2 basis points to 1.731 per cent on Wednesday after dropping sharply in the previous session as investors sought out havens.

“The statements out of the US administration this week illustrate once again how the White House is willing to draw in multiple fronts when it comes to trade policy,” said Kerry Craig, global market strategist at JPMorgan Asset Management, noting fragile investor sentiment. “Markets may recalibrate their expectations for [an] early resolution to the China-US trade war, but shouldn’t discount it completely.”

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