World markets cautious on worries over U.S.-China talks

Annabelle Liang, The Associated Press</span>
Published Wednesday, January 23, 2019 12:38AM EST
Last Updated Wednesday, January 23, 2019 7:34AM EST

SINGAPORE -- World stock markets were subdued Wednesday as news of possible hiccups in U.S.-China trade talks ratcheted up growth worries.

KEEPING SCORE: Germany's DAX was up 0.1 per cent to 11,102 and the CAC 40 in France rose 0.3 per cent to 4,860. Britain's FTSE 100 was 0.3 per cent lower at 6,878. Wall Street was expected to open higher following losses the day before. The future contract for the Dow Jones industrial average was 0.5 per cent higher while that for the S&P 500 was up 0.3 per cent.

THE DAY IN ASIA: Japan's Nikkei 225 index shed 0.1 per cent to 20,593.72 after the Bank of Japan kept its short and long term interest rates intact as expected but lowered its inflation forecasts. South Korea's Kospi rose 0.5 per cent to 2,127.78. Hong Kong's Hang Seng was almost flat at 27,008.20. The Shanghai Composite index gained 0.1 per cent to 2,581.00. Australia's S&P ASX 200 slipped 0.3 per cent to 5,843.70. Shares fell in Taiwan, Singapore and Indonesia but rose in Malaysia.

U.S.-CHINA RELATIONS: White House economic adviser Larry Kudlow denied reports by media outlets including the Financial Times and CNBC saying the U.S. had turned down an offer by Chinese trade officials to meet in Washington this week, due to a lack of progress on issues such as protection of intellectual property. He said both sides are working toward the higher level talks. The reports, citing unnamed sources close to the matter, said the preparatory discussions were meant to pave the way for meetings between Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer next week. The news comes after the International Monetary Fund lowered its global growth estimates for 2019 and 2020.

ANALYST'S TAKE: "The U.S. strategy might be to raise pressure on the Chinese ahead of the hard deadline in March, but this makes for uncomfortable interpretation by markets, and could potentially induce excessive volatility in the interim," Chang Wei Liang of Mizuho Bank said in a commentary.

JAPANESE TRADE: On Wednesday, Japan released weaker-than-expected trade data for December. The country said its exports fell by 3.8 per cent from a year earlier, its largest drop in two years. It also posted its first full-year trade deficit since 2015. Imports climbed 1.9 per cent in December, missing the market estimate of a 3.7 per cent rise, and way below November's 12.5 per cent surge. Weaker Japanese exports suggest that a slowdown in China, the world's second largest economy, is starting to have an impact on companies elsewhere that rely on it for business.

ENERGY: U.S. crude oil picked up 35 cents to $53.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed $1.03 lower on Tuesday. Brent crude, used to price international oils, gained 46 cents to $61.96 per barrel. It dropped $1.24 the day before.

CURRENCIES: The dollar strengthened to 109.67 yen from 109.37 yen late Tuesday. The euro rose to $1.1365 from $1.1361.

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