Asian stocks rally as weaker yuan eases fear of more tariffs

Alicia Cross
November 2, 2018

Trump has already imposed tariffs on $250bn worth of Chinese goods, and China responded with retaliatory duties on $110bn worth of U.S. goods.

He has long threatened to impose tariffs on all remaining Chinese imports into the United States if Beijing fails to meet his demands for sweeping changes to trade, technology transfer and industrial subsidy policies.

On Monday, the USA president said in an interview with American news outlet Fox News that: "I think we will make a great deal with China, and it has to be great because they've drained our country".

For most of this year investors have remained hopeful that the USA and China would work out their disagreements on trade policy and that numerous tariffs would be reduced or eliminated.

The price of USA crude oil fell 0.8% to $67.04 a barrel in NY.

The Nasdaq composite sank 116.92 points, or 1.6 percent, to 7,050.29.

Japan's Nikkei 225 index jumped 1.4 percent to 21,434.38 after official data showed that its unemployment rate eased to 2.3 percent in September, from 2.4 percent a month earlier. The Russell 2000 index of smaller-company stocks gave up 6.51 points, or 0.4 percent, to 1,447.31.

The S&P 500 Index looked set to extend its rally from a day earlier as more company results rolled in, with General Motors, GlaxoSmithKline and Sprint among those beating expectations.

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China has retaliated with its own tariffs against U.S. goods, but continues to maintain that there can be no winners in a trade war.

The US dollar pushed higher against the offshore Chinese Yuan and neared the 7.00 level for the first time in almost two years. President Donald Trump recently told Agri-Pulse that "you've got to have a little time", referring to when trade relations may return to normal or better status between the United States and China. He can refuse to go along with Trump's demands-allowing him to save face domestically by standing up to America-or he can offer a new deal, giving Trump more fodder for tweets that humiliate China's attempt to work with the U.S.to end the trade war.

Germany's DAX rose 1.2 percent as Volkswagen, Daimler and BMW made big gains.

Brazil's Bovespa rose in morning trading after far-right politician Jair Bolsonaro was elected president, but it later turned lower and lost 2.2 percent.

The Stoxx Europe 600 Index surged 1.3 percent to the highest in a week. Brent crude, used to price global oils, lost 19 cents to $77.18 per barrel.

The December crude contract was down 55 cents at US$67.04 per barrel and the December natural gas contract was down 2.7 cents at US$3.20 per mmBTU.

Benchmark 10-year U.S. Treasury notes last fell 7/32 in price to yield 3.1132 percent, from 3.087 percent late on Monday. Silver fell 1.8 percent to $14.44 an ounce.

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