HONG KONG: Asian markets were mixed on Wednesday (Aug 1), with Shanghai and Hong Kong sharply lower following reports the US was planning to more than double planned tariffs on China.
The region started on a positive note, tracking a Wall Street lead on hopes China and the US would resume talks to resolve their deepening trade war. Healthy corporate earnings also provided support.
Bloomberg News reported that Washington and Beijing were looking to discuss the tariffs row that has fuelled fears of an all-out trade war between the world's top two economies.
That came after Treasury Secretary Steven Mnuchin said last week that "some quiet conversations" had taken place, adding that the US was open to discussions "any time China is willing to seriously negotiate".
However on Tuesday reports said the White House was considering raising to 25 per cent from 10 per cent its planned tariffs on US$200 billion worth of Chinese goods.
Tariffs on US$16 billion of Chinese imports are due in coming weeks, following measures on US$34 billion worth of goods imposed in July, which prompted a response in kind by Beijing.
Nick Griffin, chief investment officer at Munro Partners, told Bloomberg Television: "The tariff issue is ongoing, I think it's a negotiating tactic.
"How much we take of this as real and affecting earnings is questionable at this stage. In terms of an actual earnings effect, it's not that big at the moment, it's mainly just sentiment and risk appetite and for that it's a moving feast."
YEN LOSSES BUILD
Still, Shanghai tumbled 1.80 per cent and Hong Kong lost 0.9 per cent, while Sydney slipped 0.1 per cent. Wellington shed 0.7 per cent.
But Tokyo ended 0.9 per cent higher on a weaker yen, while Singapore added 0.3 per cent and Seoul gained 0.5 per cent. Taipei, Manila, Jakarta and Bangkok were also up.
Suppliers to Apple performed well after the US giant announced better-than-forecast profits. Foxconn climbed 1.7 per cent in Taipei, Japan Display rallied 1.4 per cent in Tokyo and Seoul-listed LG Display was 1.9 per cent higher.
On currency markets the yen extended Tuesday's drop after the Bank of Japan tweaked monetary policy but held off on any major tightening measures, while revising down inflation expectations.
Stephen Innes, head of Asia-Pacific trading at OANDA, said: "The BoJ announced minuscule adjustments. Traders view incredibly subtle shift towards policy normalisation as definitively dovish and topside (for the dollar) is now in play."
Oil prices also fell further after Trump's Monday offer of talks with Tehran to resolve the nuclear row. Crude has risen in recent months on fears supplies would be cut off by the US decision to withdraw from an international accord with Iran over its atomic programme and to reimpose sanctions.
Traders are also awaiting the release later in the day of a closely watched US crude inventories report, seen as a barometer for supply and demand in the world's top oil-consuming nation.
In early trade London was flat, Paris rose 0.3 per cent and Frankfurt added 0.1 per cent.
- Key figures at 0810 GMT -
Tokyo - Nikkei 225: UP 0.9 per cent at 22,746.70 (close)
Hong Kong - Hang Seng: DOWN 0.9 per cent at 28,340.74 (close)
Shanghai - Composite: DOWN 1.8 per cent at 2,824.53 (close)
London - FTSE 100: FLAT at 7,748.49
Dollar/yen: UP at ¥112.18 from ¥111.81 at 2030 GMT
Euro/dollar: DOWN at US$1.1688 from US$1.1697
Pound/dollar: DOWN at US$1.3114 from US$1.3127
Oil - West Texas Intermediate: DOWN 51 cents at US$68.25
Oil - Brent Crude: DOWN 39 cents at US$73.82 per barrel
New York - Dow Jones: UP 0.4 per cent at 25,415.19 (close)