Stock markets in Asia drop as US-China tensions hinder sentiment
Despite stock markets in Asia edging up on Friday (May 15), the bigger picture showed that they were poised close lower this week as crumbling US-China relations fuel global uncertainty regarding the speed at which economies can recuperate as governments start loosening their respective lockdowns.
Fears over a showdown between the two biggest economies on the planet overshadowed the recently released Chinese economic data, which demonstrated that the nation's economy was inching closer to recovery from the brunt of the pandemic.
As China was the first to ease back its lockdown, global traders are intently focused on it, as they look for hints on what can be expected in terms of demand resurgence, as various other nations start to ease back their own lockdown restrictions.
Stocks in European are likely to play catch up with the late recovery in US shares on Thursday (May 14), with pan-European Euro Stoxx 50 futures up 1.21%.
US S&P500 futures took a 0.2% dive after the index grew a whopping 1.15% just the day before, as it recuperates from a three-week low.
Japan's Nikkei grew 0.6% yet completed the week 0.7% lower while mainland China shares showed mixed results.
MSCI’s broadest index of Asia-Pacific shares outside Japan grew by 0.2% but has finished about 1.0% lower so far this week.
Although many financial specialist saw the week’s overall plunge as a predictable correction after a mid-March rally, there is also a rising fear among them over increasing tension in US-China relations. US President Donald Trump is currently shifting blame towards China for the way it handled the coronavirus outbreak, which had resulted in over eighty five American fatalities.
The US president also said that he has no intention of speaking with China’s President Xi Jinping at the moment, signaling a further deterioration of the relations between the two nations.
Trump even went so far as to hint that the US could possibly cut ties with the world's second-biggest economy, shortly following the US federal pension fund deferring investments into Chinese offers after mounting pressure from the Trump Administration.
This only served to promote the trepidation that the strife among Washington and Beijing could spill over past trade and into and different areas such as finance.
"The US-China trade war was the biggest theme for markets last year. It will be a big concern if the conflict escalates beyond trade," said Takeo Kamai, head of execution at CLSA.
China's April production yield rose 3.9% year-on-year, surpassing expectations of a 1.5% growth and is the first push upwards in 2021 as the nation’s economy gradually eases out of its lockdown. Be that as it may, retail sales were still weak as joblessness rose.
"On the whole, the Chinese economy is improving and the industrial output figures suggest GDP could be positive in April-June," said Wang Shenshen, senior strategist at Mizuho Securities. "But concerns about the U.S.-China relations are weighing on markets."