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GLOBAL MARKETS-Asian shares edge down as tariff deadline hems bets

Published 10/12/2019, 06:58
Updated 10/12/2019, 07:00
© Reuters.  GLOBAL MARKETS-Asian shares edge down as tariff deadline hems bets
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* MSCI Asia ex-Japan off 0.2%; Nikkei down 0.1%

* German shares seen lower; FTSE futures point slightly

higher

* China says it wants to make a trade deal as soon as

possible

* U.S. official says Trump wants 'movement' from China to

avoid

tariffs

* China producer prices fall, consumer prices spike in

November

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Andrew Galbraith

SHANGHAI, Dec 10 (Reuters) - Asian equity markets eased

slightly on Tuesday, tracking Wall Street declines as investors

fretted over a Dec. 15 deadline for the next round of U.S.

tariffs on Chinese imports to take effect.

European equity futures pointed to similarly small moves.

Pan-region Euro Stoxx 50 futures STXEc1 were down 0.03% and

German DAX futures FDXc1 were 0.14% lower in early trade,

while FTSE futures FFIc1 added 0.1%.

Market uncertainty ahead of the tariff deadline was

reinforced by comments from U.S. Agriculture Secretary Sonny

Perdue on Monday that while President Donald Trump did not want

to implement tariffs, he did want to see "movement" from China.

The deadline looms over a series of other significant events

this week, with markets also awaiting the UK election on

Thursday, and U.S. and euro zone central bank meetings.

Investors have focused this year on the risks of the UK

crashing out of the European Union without a deal and a sharp

escalation in trade war tensions, said Frank Benzimra, head of

equity strategy at Societe Generale.

"What you have seen since the end of the third quarter and

the beginning of the fourth quarter was these two risks were

receding ... And now this week you see those two concerns coming

back on the market," he said, adding that he expected their

impact to be "short-term."

With investors reluctant to make big bets, MSCI's broadest

index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was

0.17% lower, with China's benchmark Shanghai Composite index

.SSEC off 0.08%.

Adding pressure in China was new data showing falling

producer prices in November while consumer prices spiked,

complicating efforts to boost demand as economic growth slows.

Australian shares .AXJO were off 0.34%, while Japan's

Nikkei .N225 was down 0.08%.

"The decision whether or not to raise tariffs on Dec. 15

rests with President Trump and he has continued his constructive

ambiguity on the issue which is keeping markets guessing," said

Tapas Strickland, a director of economics and markets at

National Australia Bank.

Tepid trade followed weakness on Wall Street overnight. The

Dow Jones Industrial Average .DJI fell 0.38% to 27,909.6, the

S&P 500 .SPX lost 0.32% to 3,135.96 and the Nasdaq Composite

.IXIC dropped 0.4% to 8,621.83. Investors were also keeping an eye on the U.S. Federal

Reserve, which is expected to keep rates unchanged at its

two-day policy meeting, which ends Wednesday.

With rates likely to stay put, analysts say investors will

be closely watching policymakers' forecasts for future U.S.

economic growth. On Tuesday, the U.S. two-year yield, watched as a sign of

market expectations of Fed fund rates, was at 1.6152%, down from

its close of 1.627% on Monday.

The 10-year Treasury yield US10YT=RR was at 1.8138% from a

U.S. close of 1.831% on Monday.

Following the Fed, investors are likely to scrutinise the

first policy meeting led by new European Central Bank President

Christine Lagarde on Thursday for clues on where she will take

the bank. While expectations of a Conservative Party victory in

Thursday's UK election have powered a rally in the pound,

options markets indicate worries of a post-election retreat.

"Polls have been wrong before, so a surprise can't be ruled

out - that's exactly what happened in the 2017 election,"

analysts at ANZ said in a morning note.

"But it's not just about Brexit. Fiscal expansion is also on

the cards, with ending austerity a major theme of the election

irrespective of who wins," they said.

Sterling, which hit its highest level against the dollar

since April on Monday at $1.3180, added 0.08% to buy $1.3153.

GBP=

The dollar rose 0.05% against the yen to 108.60 JPY= and

the euro EUR= was up 0.03% at $1.1065.

The dollar index .DXY , which tracks the U.S. currency

against a basket of six major rivals, was down 0.02% at 97.629.

Worries over trade continued to push oil prices lower. Data

released on Sunday showed that Chinese exports declined for a

fourth straight month, underscoring the impact of the trade war

between the U.S. and China, which is in its 17th month.

Global benchmark Brent crude LCOc1 fell 0.12% to $64.17 a

barrel and U.S. West Texas Intermediate crude CLc1 dipped

0.15% to $58.93 a barrel.

Gold was a touch higher on the spot market XAU= , fetching

$1,462.34 per ounce. GOL/

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