Morning Report

Monday, 23 July 2018

  • Asian stocks declined on Monday, with Japan’s Nikkei 225 taking a hit amid the weaker dollar.
  • The greenback was on the back foot after U.S. President Donald Trump doubled down on his criticism of global monetary policy and the Federal Reserve last week.
  • Trump’s comments on putting tariffs on $500 billion in Chinese imports were largely shrugged off by U.S. markets last week in the wake of strong earnings.

Asian shares declined on Monday, with Japanese stocks pressured by weakness in the dollar after the currency dropped on U.S. President Donald Trump’s criticism of the Federal Reserve.

The Nikkei 225 dropped 0.98 percent in morning trade as the dollar extended its losses against the Japanese currency. Kospi slipped 0.27 percent as steep declines in blue chip tech stocks. In Australia, the S&P/ASX 200 shed 0.55 percent amid broad-based losses.

The dollar nursed its losses after Trump doubled down on his criticism of global monetary policy and the Federal Reserve, tweeting that “China, the European Union and others have been manipulating their currencies and interest rates lower.” That, coupled with U.S. interest rate hikes, was making the U.S. lose its competitive edge as the dollar strengthened, Trump claimed.

The dollar remained broadly weaker on the back of those comments after Friday’s slide. The dollar index, which tracks the greenback against a basket of currencies, stood at 94.299 after stumbling on Friday. The People’s Bank of China (PBOC) set the Yuan reference rate at 6.7593 vs Friday’s fix of 6.7671.

Despite Trump’s recent remarks, stocks stateside finished the Friday session only marginally lower as strong corporate results releases balanced investors’ fear of the trade war and its implications for global economic growth.

The Dow Jones Industrial Average slipped 0.03 percent, or 6.38 points, to close at 25,058.12, the S&P 500 shed 0.09 percent to end at 2,801.83 and the Nasdaq Composite inched lower by 0.07 percent to 7,820.20.

Oil prices were mixed on Monday as finance ministers and central bank governors from the G20 warned that risks to global growth have increased with rising trade and geopolitical tensions among other vulnerabilities. Brent crude was up 2 cents at $73.09 a barrel, having ended up 49 cents on Friday. U.S. West Texas Intermediate was down 8 cents at $68.18 a barrel, after finishing up 2 cents on Friday.

Source : Reuters

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