Asian markets hurt by fresh tensions; eyes on Powell speech

A woman wearing a face mask walks past an electronic board showing Asian stock index overview and news report on the oil market at a shopping mall in Bangkok on March 9, 2020. (Photo: AFP)

Hong Kong, China | Markets were mixed Thursday ahead of a key policy speech by Fed chief Jerome Powell, while geopolitical concerns returned after Beijing fired missiles into the South China Sea and the US sanctioned several Chinese firms linked to the disputed region.

A fourth successive record on Wall Street was not enough to stoke a rally in Asia, with a fresh flare-up in coronavirus cases in the region keeping dealers grounded.

The mood in Asia was more downbeat compared with earlier in the week with Bloomberg News reporting China had fired four ballistic missiles as part of a military exercise, a day after a flyover by a US spy plane.

The region is one of a number of issues over which China-US tensions have spiked in recent months.

In July, Washington declared Beijing's pursuit of territory and resources there illegal, explicitly backing the territorial claims of Southeast Asian countries against China.

And on Wednesday, it imposed sanctions and restrictions on 24 Chinese companies and associated officials for taking part in building artificial islands in the disputed waters.

The US Commerce Department said the firms "enabled China to construct and militarise disputed outposts in the South China Sea".

Hong Kong lost 0.8 percent with HSBC taking a hit after being slammed by US Secretary of State Mike Pompeo over reports it had frozen access to credit card and bank accounts for executives of independent media group Next Media.

Tokyo lost 0.4 percent and Seoul retreated more than one percent while Taipei, Singapore and Manila were also in the red.

But Shanghai, Mumbai and Bangkok were up 0.6 percent, Sydney added 0.2 percent and Jakarta edged 0.1 percent higher.

London, Frankfurt and Paris slipped in the morning.

Wellington trade was halted in the morning after the exchange was hit by a third cyber attack in as many days, forcing operator NZX to carry out a probe.

- Storm hits oil production -

With earnings season gone and China-US trade talks settled for now -- despite ongoing tensions -- the next point of focus is Powell's presentation Thursday at the virtual meeting of global central bankers, in which he is expected to outline the Federal Reserve's monetary policy plans.

The US central bank has provided crucial support worth trillions of dollars to the world's top economy during the virus crisis, helping stocks bounce back from their March troughs.

While observers predict the speech will outline a new policy framework for inflation and interest rates, there is also some hope for some further easing measures, especially with lawmakers in Washington failing to reach any agreement on a new stimulus.

"There is some speculation that (Powell) could well explore or hint at a new policy of average inflation targeting," said Michael Hewson at CMC Markets.

"This means that central bank policymakers would be prepared to tolerate prices rising above (the Fed's target of) two percent for periods of time to compensate for other periods of time when inflation is running below target."

He added that Powell would also likely "ram home the message from his previous press conference that the recovery still largely depends on the virus, and the Fed remains ready to do whatever is necessary to support the economy".

Oil traders are keeping tabs on Hurricane Laura in the Gulf of Mexico, which made landfall in Louisiana Thursday morning.

Around three million barrels a day of refining capacity have been closed after US authorities said the hurricane could bring "potentially catastrophic storm surges, extreme winds and flash flooding".

Crude prices were flat but were holding around five-month highs.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: DOWN 0.4 percent at 23,208.86 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at 25,281.15 (close)

Shanghai - Composite: UP 0.6 percent at 3,350.11 (close)

London - FTSE 100: DOWN 0.3 percent at 6,028.58

Euro/dollar: DOWN at $1.1826 from $1.1831 at 2115 GMT

Dollar/yen: UP at 105.99 yen from 105.97 yen

Pound/dollar: UP at $1.3211 from $1.3203

Euro/pound: DOWN at 89.52 pence from 89.54 pence

West Texas Intermediate: DOWN 0.1 percent at $43.34 per barrel

Brent North Sea crude: UP 0.2 percent at $45.72 per barrel

New York - Dow: UP 0.3 percent at 28,331.92 (close)

© Agence France-Presse


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