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GLOBAL MARKETS-Asian shares a sea of red on trade, emerging market anxieties

Published 2018-09-05, 11:47 p/m
© Reuters.  GLOBAL MARKETS-Asian shares a sea of red on trade, emerging market anxieties
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(Updates prices throughout, adds analyst comment, Indonesian stocks)

* Asian stock markets : https://tmsnrt.rs/2C2BSt0

* MSCI Asia ex-Japan down 0.4 percent, Nikkei off 0.2 pct

* Investors wary of escalation in U.S.-China trade war

* Dollar index retreats from two-week highs

By Swati Pandey

SYDNEY, Sept 6 (Reuters) - Asian shares fell for a sixth straight session on Thursday as oil skidded and safe-haven gold gained, with investor confidence shaken by turmoil in emerging markets and jitters over a potentially severe escalation in the U.S.-China trade war.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.4 percent to hit its lowest since mid-August.

Japan's Nikkei .N225 slipped 0.2 percent while Australian and New Zealand indices .AXJO .NZ50 fell more than 1 percent each.

China's blue-chip index .CSI300 slipped 0.2 percent while Hong Kong's Hang Seng index .HSI dipped 0.5 percent.

Investors were focused on the Sino-U.S. trade war with a public consultation period on the Trump administration's intent to impose tariffs on an additional $200 billion of Chinese goods ending on Thursday. escalation of the U.S.-China trade war may be imminent, the timing is somewhat unclear and this justifies caution even given the (U.S. dollar) pullback," JPMorgan (NYSE:JPM) analysts said.

"Conviction and participation will likely remain light until an announcement."

Trump said on Wednesday that the United States was not yet ready to come to an agreement over trade disputes with China but he said talks would continue. against a basket of currencies, the dollar index .DXY retreated from two-week highs hit earlier this week to be last down 0.1 percent at 95.06.

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Overnight on Wall Street, the S&P 500 .SPX lost 0.3 percent and the Nasdaq Composite .IXIC slipped 1.2 percent. The Dow .DJI was a rare bright spot, up 0.1 percent. .N

Investors are also watching for developments as the United States and Canada resume talks about revamping the North American Free Trade Agreement. Canada insisted there was room to salvage the pact despite few signs a deal was imminent. dollar, considered a safe haven at times of turmoil because of its status as the world's reserve currency, has generally benefited from these trade uncertainties. It has gained 8 percent since end-March, with currencies in emerging markets taking a hammering.

PAUSE, NOT PANACEA

The financial crises in Argentina and Turkey have sent shivers through emerging markets while in Indonesia the central bank has had to intervene several times in recent weeks to stem the rupiah currency's slide.

Indonesia's benchmark stock index .JKSE was last up 0.4 percent while the rupiah also rose a tad.

An index of emerging market currencies .MIEM00000CUS paused near 15-month lows after two straight days of heavy declines.

But analysts warned about further losses as investors were no longer looking at Argentina, Turkey and South Africa as isolated cases. They are also fretting over the impact of rising U.S. 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," analysts at Mizuho said in a note.

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The emerging market equity index .MSCIEF has been crunched in the past month or so, falling for six consecutive sessions and down more than 3 percent this week.

Analysts at Capital Economics believe there was room for further declines.

A range of factors have hit EM stocks recently, namely policy tightening by the U.S. Federal Reserve, crises in Turkey and Argentina, the Sino-U.S. trade war and broader concerns about China's economy.

"We doubt that the main factors which have caused equities across much of the emerging world to weaken together recently will go away just yet," Capital Economics said in a note.

Argentina's peso had some respite on Wednesday as government officials in Washington sought emergency funding to stem an economic crisis.

The cash-strapped nation is asking the International Monetary Fund for early disbursements from a $50 billion standby loan agreed in June, which had failed to clear concerns about the country's ability to pay off its debt L2N1VR0LU .

Elsewhere, sterling GBP= gained for a second day as investors positioned for a favourable Brexit outcome. It was last up 0.1 percent ay $1.2914.

In commodities, oil prices fell as emerging market woes weighed on sentiment. U.S. crude CLcv1 eased 14 cents to $68.58 a barrel while Brent LCOcv1 was last down 14 cents at $77.13. O/R

Gold was stronger with spot gold XAU= up 0.2 percent at $1,198.6 an ounce.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ MSCI and Nikkei chart

http://reut.rs/2sSBRiD Asian stock markets :

https://tmsnrt.rs/2C2BSt0 Global assets' performance

https://tmsnrt.rs/2BX92de World FX rates in 2018

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http://tmsnrt.rs/2egbfVh

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam and Eric Meijer)

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