U.S. Waves Tariff Weapon And Weakens Spirits

Overview:

Asia Pacific equities mostly declined in sympathy with yesterday’s large sell-off in the US and Europe. China and Taiwan were the notable exceptions, while Australia’s 2.2% decline, following the central bank meeting that resulted in what many are seeing as a hawkish hold, led the move lower. Europe’s Dow Jones fell 1.6% yesterday, the largest loss in two months, and is extending the losses for a third session today. US shares are trading with a lower and a gap lower opening is possible.

Benchmark 10-year yields are narrowly mixed, accept in Australia and New Zealand, where they jumped 10 bp and 8 bp, respectively. The dollar sold-off yesterday and is trading with a mixed tone today in narrow ranges against all the major currencies. JP Morgan’s Emerging Market Currency Index is a little weaker, threatening to end its two-day bounce to resume its downtrend. is firm and is moving above its 20-day moving average ($1464.6), which it has not traded above in a month. continues consolidating its pre-weekend loss that saw WTI for January delivery fall from above $58 to $55.

Asia Pacific

One Chinese media outlet reports China is drawing up a list of “unreliable entities,” ostensibly a list of US companies it will sanction. Beijing has been threatening to do this for around six months. While it could be in retaliation for the recently signed HK bills in the US, it could also be in anticipation of the passage another bill working its way through the Senate that would sanction officials and companies involved with China’s campaign against the Uighur Muslims. Yesterday, Trump renewed his threat to raise tariffs on China if there is no agreement. The market had expected the mid-December tariffs the US threatened to be suspended like the October’s. However, there appears to be

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