Asian markets have weathered the storm of the US market sell-off last week and are mostly trading flat to slightly negative this morning. Wall Street closed lower on Friday, but in an orderly fashion after positive US employment data. The S&P 500 fell 0.82%, the NASDAQ lost 1.27%, and the Dow Jones was down 0.57%.
Today in Asia, Japan is down 0.15% with South Korea climbing 0.70%. In China, the Shanghai Composite has fallen 1.87% with the CSI 300, being more tech-laden, falling 2.11%, with the Hang Seng falling 0.43%. Australia’s ASX 200 and All Ordinaries are flat, as are Singapore, Taipei, Bangkok and Kuala Lumpur.
Trade war tensions between the United States and China have ratcheted higher, on news that the US was considering export bans on components for Chinese chipmaker SMIC. Threats of the prohibition on Tencent’s We
Chat app continuing to rumble in the background. Although SMIC’s stock has fallen 15% in Hong Kong this morning, the fallout has been relatively contained. Markets have appeared to be adjusting to the constant US and China tit-for-tat as the new normal and getting on with life despite it.
The threat of a ban on SMIC by the US appears to be favoring alternatives in South Korea this morning, explaining its outperform. Across the rest of the region, markets seem content to adopt a wait and see approach, breathing a sigh of relief that Thursday’s US rout did not maintain the same momentum into Friday’s close.
China’s Balance of Trade data was released earlier on Monday. In US dollar terms the trade balance came in at $59 billion for August, lower than July but well above consensus. Exports rose 9.50%, while imports fell by -2.10%. The positive Balance of Trade release numbers should reassure investors that China’s recovery remains on track, with both the domestic and export sectors firing on all cylinders.