Asia report: Markets weaker as trade tensions flare up

Most markets in Asia finished lower on Monday, as trade concerns lingered in both North America and around ongoing tension between the US and China.

In Japan, the Nikkei 225 was down 0.69% at 22,707.38, as the yen weakened 0.09% to last trade at JPY 111.13.

On the mainland, the Shanghai Composite was off 0.17% at 2,720.74, and the smaller, technology-heavy Shenzhen Composite closed 0.17% lower at 1,448.93.

Bourses in China headed lower after the unofficial Caixin purchasing managers’ index came in at 50.6 - its weakest reading since June last year - with export sales falling for the fifth month in a row.

South Korea’s Kospi lost 0.68% to finish at 2,307.03, while the Hang Seng Index in Hong Kong slid 0.63% to 27,712.54.

Trade concerns were the theme of the day in the region, with ongoing tension between the US and China being evidenced by the weak Caixin PMI reading in the People’s Republic.

There was also consternation over the state of trade in North America, after Ottawa and Washington failed to meet the US-dictated deadline of Friday to reach a trade deal to replace NAFTA.

That deadline was set days after the US and Mexico had reached agreement on a new trade partnership.

Talks between the White House and Parliament Hill are due to continue this week.

“With heightened US-China trade tensions running in the background - with the consult on another $200bn of tariffs on China - any relief that NAFTA might present this Wednesday, assuming Canada reaches an agreement, could prove to be fleeting,” noted Mizuho Bank head of economics and strategy Vishnu Varathan.

Varathan added that if Trump tightened the screws on China, risks in emerging markets could “flare up” once more.

Oil prices were higher, with Brent crude last rising 0.77% to $78.24 per barrel, and West Texas Intermediate adding 0.21% to $69.95.

In Australia, the S&P/ASX 200 slipped 0.14% to settle at 6,310.90, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.6% weaker at 9,257.29.

The down under dollars were a mixed affair, with the Aussie last 0.35% stronger on the greenback at AUD 1.3857, while the Kiwi retreated 0.26% to NZD 1.5144.