Street Calls of the Week
Updates at 01:00 ET (05:00 GMT) with India open, context on New Delhi-Washington relations
Investing.com-- Most Asian stocks fell on Wednesday, tracking overnight losses on Wall Street as investors grappled with increased uncertainty over U.S. trade tariffs, with Australian and Chinese markets taking little support from positive economic readings.
Regional markets took negative cues from Wall Street, which marked a weak start to September after an appeals court ruled against Trump’s tariffs, which could complicate recent trade deals struck by Washington with several major economies.
But S&P 500 Futures rose 0.1% in Asian trade, supported by optimism over Google owner Alphabet Inc (NASDAQ:GOOGL) after an antitrust ruling against the firm did not outline as harsh a penalty as initially feared.
But this offered little support to Asian markets, which were also due for some profit-taking after strong gains in August. Chinese shares were especially hit by this trend.
Australian shares fall as strong GDP dents rate cut bets
Australia’s ASX 200 index was the worst performer in Asia, falling 1%.
The drop came chiefly after gross domestic product data showed Australia’s economy grew more than expected in the second quarter, amid support from strong domestic demand and steady government spending.
But the signs of strength in the Australian economy, especially in consumer spending, dented expectations for more easing by the Reserve Bank of Australia.
“The pickup in domestic demand raises the risks that the RBA won’t loosen policy as aggressively as we’re predicting,” Capital Economics analysts wrote in a note, adding that the strong pick-up in activity also came amid concerns over a tight labor market and increasing signs of sticky inflation.
The RBA cut interest rates thrice so far this year, but flagged continued caution over further cuts due to signs of sticky inflation.
Separately, Australian purchasing managers index data also showed strong growth in both manufacturing and services activity.
China stocks fall past positive PMI amid some profit-taking
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% and 1%, respectively, while Hong Kong’s Hang Seng index shed 0.2% in volatile trade.
Chinese markets were pulled off multi-year highs this week as investors locked in stellar profits from August. The CSI 300 and Shanghai Composite indexes rallied 10.3% and 8% in August.
Strong private PMI data released on Wednesday, which showed a bigger-than-expected increase in service sector activity, did little to offset this trend.
But the reading, which followed positive manufacturing PMI from earlier this week, did highlight some resilience in China’s economy, with Beijing now expected to dole out more stimulus measures to support growth.
Major Chinese chipmaking and technology stocks, which were a key driver of August’s rally, retreated on Wednesday, with artificial intelligence chips maker Cambricon Technologies Corp Ltd (SS:688256) down 4.1%.
Broader Asian markets moved in a flat-to-low range. South Korea’s KOSPI was an outlier, adding 0.3% as GDP data for the second quarter read stronger than expected. But further gains in the KOSPI were held back by weakness in technology stocks.
Japan’s Nikkei 225 index shed 0.3%, while the TOPIX lost 0.4%, even as PMI data read stronger than expected for August.
Indian stocks stem losses; US trade talks eyed
India’s Nifty 50 index moved little in morning trade, stemming some losses after falling to a three-week low last week, after Trump’s 50% levies against the country took effect.
Indian commerce and industry minister Piyush Goyal said on Tuesday that New Delhi and Washington remained in talks over a trade deal, which could be finalized by as soon as November.
U.S. tariffs on India are aimed at pressuring New Delhi into ceasing its purchases of Russian oil-- a demand that India has rejected, citing its dependence on cheap Russian crude.
India was also seen pushing for more diplomatic ties with China and Russia earlier this week-- a trend that could further alienate the U.S. and its allies.
Concerns over U.S. tariffs battered Indian stocks through August, with the Nifty nursing a nearly 2% loss for the month.