Asian markets were mixed on Friday as another rally on Wall Street and data indicating a strong US economy were offset by the increasingly tense trade and technology stand-off between China and the United States. The Brexit saga also moved back into view, with the pound at three-month lows on renewed concerns Britain will leave the EU with no deal as Prime Minister Theresa May tries to push her divorce deal through again.
And oil prices sank as trade worries overshadowed tensions in the Middle East where the US and Iran are growing increasingly hostile.
New York’s three main indices rose for a third successive day on the back of better-than-expected housing construction data and a dip in US jobless claims, while solid earnings from Walmart and tech firms Cisco Systems and Nvidia reinforced optimism. The figures boosted sentiment after almost two weeks of volatility sparked by Donald Trump’s threat, and implementation, of higher tariffs on Chinese imports.
In light of the Wall Street rally, OANDA senior market analyst Jeffrey Halley said investors seem “to have temporarily given up trying to predict the fluid situation that is US-China trade relations and concentrate on the here and now”.
Hong Kong fell 1.2% in the afternoon and Shanghai tumbled 2.5% while Seoul shed 0.6% and Taipei dived 0.9% with Singapore dropping 0.7%. Tokyo finished 0.9% higher, Sydney rose 0.6%, Manila soared more than one percent. In early trade London fell 0.2%, Paris eased 0.3% and Frankfurt was off 0.5%.
Uncertainty among investors was reflected in a drop in high-yielding, riskier units, with the Chinese yuan at lows not seen since November.
The pound was also under pressure after May said she would set out her timetable for leaving office after her Brexit deal with the EU, which has already been rejected by parliament three times, goes to MPs early next month. Investors sold sterling on worries her likely defeat could lead to a no-deal Brexiter taking her post, which most commentators warn would hammer the economy.
In a sign of things to come, arch-Brexiter Boris Johnson has said he will run for the PM’s job once it is vacated.