Asian Stocks Drop for 6th Straight days

Asian stocks slid for the sixth consecutive session on Thursday. Oil prices of dropped and safe-haven gold perked up with investor confidence being rattled by the turbulence in emerging market and jitters over a potentially severe worsening in the US-China trade war.

European shares were expected to be muffled too with futures for Eurostoxx 50, Germany’s DAX, and London’s FTSE all beginning the session lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped more than 1 percent to reach a one-year rock bottom of 515.24 points.

Japan’s Nikkei decreased 0.4 percent while Australian stocks skidded 1.1 percent.

China’s blue-chip index slipped 1.2 while Hong Kong’s Hang Seng index dipped 1.5 percent.

Investors were on pins and needles with a public consultation period on the Trump administration’s intent to impose tariff on an extra $200 billion worth of Chinese goods ending on Thursday.

US President Donald Trump said on Wednesday that the United States was not yet ready to come to an agreement over trade disputes with China but he stated that talks would still continue.

“An escalation of the US-China trade war may be imminent, the timing is somewhat unclear and this justifies caution even given the (US dollar) pullback,” said JPMorgan analysts.

The US dollar index, which gauges the greenback’s strength against a basket of six other major currencies, retreated from two-week highs reached earlier in the week to hover around 95.16.

“Conviction and participation will likely remain light until an announcement,” the analysts added.

Further weighing on sentiment, data out earlier showed that German industrial orders fell unexpectedly in July in another sign that factories in Europe’s largest economy are feeling the bite of protectionist trade politics.

The euro was a shade weaker at $1.1624.

Investors are also on the lookout for the developments as the United States and Canada resume talks about revamping the North American Free Trade Agreement. Canada insisted that there was room to salvage the agreement in spite of the few signs that the deal was imminent.

The dollar, which is considered a safe haven in times of uncertainty because of its standing as the world’s reserve currency, has in general benefitted from these trade uncertainties. It has increased 8 percent since the end of March, with currencies in emerging markets all floundering.

The financial crises happening in Argentina and Turkey have sent jitters through emerging markets. Meanwhile, while in Indonesia, the central bank has had to intervene several times  in recent weeks to stem the rupiah currency’s drop.

Indonesia’s benchmark stock index was last 0.1 percent higher while the rupiah also gained a tad.

An index of emerging market currencies steadied near 15-month lows after two consecutive days of heavy declines.

However, analysts cautioned about further losses as investors were no longer looking at Argentina, Turkey, and South Africa as isolated cases. They are jittery over the impact of rising US inflation and interest rates on heavily indebted Asian economies.

“The upshot is that this pause should not be mistaken for a panacea to the ongoing emerging market crisis, which demands utmost policy vigilance; and perhaps coordination,” said analysts at Mizuho.

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