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Asian stocks slipped on Friday as the United States and China failed to find a resolution over ongoing trade tensions between the two countries.

Meanwhile, the Australian dollar faced its sharpest downfall in a year following comments made by the country’s central bank governor regarding possible cuts in interest rates later in the year.

At The White House on Thursday, U.S. President Donald Trump said that he was ‘unlikely’ to meet with Chinese President Xi Jinping for talks on a possible trade agreement between the US and China before the March 2 deadline. The U.S. President previously declared his intention to raise duties on Chinese goods in the event that the two sides are unable to reach an agreement by March 1.

Asian markets saw a sharp decline in their shares following the US president’s remarks with Hong Kong’s Hang Seng falling 0.8 percent and Malaysia’s KLCI falling .33 percent with a turnover of around 69 million shares. In Japan, the country’s Nikkei index fell 362 points to 20,338.38 while the South Korean Kospi declined 1.2 percent to 2,177.04 points. Meanwhile, Chinese and Taiwanese markets remained closed for the Lunar New Year holidays.

The lack of progress on US-China trade negotiations has elicited fears from investors concerned over the implications of the dispute between the world’s two largest economies both globally and business-wise. A recent survey conducted by London-based services company PricewaterhouseCoopers showed that among CEOs in the Asia-Pacific region, fear of trade conflicts is now perceived as being the primary threat to prospects for revenue growth over the short and medium-term.

In Australia, the nation’s currency fell 0.71 percent against the U.S. dollar after the head of the country’s reserve bank signaled the possibility of cutting interest rates in response to declining consumption trends and property prices. In a speech delivered at Australia’s National Press Club on Friday, Reserve Bank Governor Phillip Lowe mentioned the likelihood of cutting interest rates in the event that consumer spending and stagnating wages were to maintain their downward trend.

Lowe’s announcement is said to have caught investors off-guard after he had previously signaled the possibility of stepping up interest rates. Comments made in response to the declaration have been generally mixed with The Australian Financial Review’s John Kehoe opining that economic growth was better guaranteed by higher pay to workers and increased business productivity. Others however have perceived the rise in interest rates as being inevitable. The Australian Commonwealth Bank’s chief economist, Michael Blythe, remarked, “It appears to be about the balance of risks. If you were just looking at the forecasts, you would say that the next move is up.”