Equities wilt on Trump executive orders

Asian markets retreat on Trump threats

Wall Street stock indices rose overnight, but that has been quickly forgotten in Asia, with regional markets wilting under the deluge of US executive orders regarding Chinese companies this morning. A surge in Chinese exports announced today, has also been lost in geopolitical noise.

The retreat in Asia comes after news that Microsoft is allegedly now looking to buy all TikTok’s operations outside of China. It highlights the challenges Chinese companies will have, emerging internationally from behind the great firewall of China protective cocoon. At the heart of the matter, are concerns about Chinese companies’ security law obligations to the government on the mainland. Especially with regards to the terabytes of data they collect from international customers. Apart from conveniently playing into populist presidential hands ahead of an election, the US does have a fair point regarding the above.

The Nikkei 225 has fallen 0.80% today ahead of a long weekend for Japan as investors there take risk off the table. South Korea is 0.20% lower. Chinese mainland indices have taken some heart from the impressive China trade data announced today but are still in negative territory on geopolitical concerns. The Shanghai Composite is down 1.20%, with the CSI 300 down 0.50%.

Hong Kong has borne the brunt of the geopolitical selling, as Tencent is listed there. The Hang Seng is 2.35% lower. Across Asia, Singapore is down 0.90%, with Kuala Lumpur, and Jakarta both in slightly negative territory. In Australia, soothing words from the RBA today on the local economy has limited the fallout. The ASX 200 is down 0.80%, but the broader All Ordinaries down only 0.30%.

With the White House coming out swinging today, and China sure to riposte, equities markets will remain under pressure. That will almost certainly spill over into European and US stocks later today. A weak Non-Farm Payroll number could leave investors nursing deeper cuts by the session’s end. Regarding Asia, we would expect the sell-off to gather pace as the day goes on, with investors reducing risk into what could be a fraught US session and event risk-heavy weekend.

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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