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Asia Stocks Bounce Back From Early Trade-Tension Declines

15 Mar 2018 5:03 am
By Kenan Machado 

Stocks in several Asia-Pacific markets came back from early declines Thursday as interest in cheap buying opportunities started to push back concerns over trade protectionism.

Stocks in Japan and Hong Kong initially dropped by more than 1% following falls in major U.S. benchmarks overnight, but as investors perceived overselling they stepped in and pushed the Nikkei and the Hang Seng back into positive territory. Hong Kong's recovery was helped by southbound flows from mainland China.

The initial pessimism stemmed largely from a third straight fall in major industrial stocks in the U.S. concern over the implications of protectionist trade policies. The Commerce Department said Wednesday that U.S. businesses seeking to avoid tariffs on supplies they import will face high hurdles. A puzzling decline in U.S. retail sales, meanwhile, hit stocks in that sector.

The Nikkei's push back into positive territory was helped by the yen's retreat off session highs. The benchmark was up 0.1% and the dollar was back above Yen106, from an early low of Yen105.83.

Stocks of large Chinese firms trading in Hong Kong logged gains, with Tencent up 0.9%, bringing this week's increase to 4.6%. Ping An, another common bet of mainland investors looking south, was up 3%.

South Korea's Kospi index climbed from the negative into the positive, while Australia's S&P/ASX 200 pruned declines, though it was still down 0.2%--on course for a third-straight drop, done in by energy stocks. Stocks in Shanghai were largely flat, while benchmarks in Shenzhen, Singapore and Malaysia were down by as much as 0.6%. A late-afternoon rally left New Zealand stocks up 0.4%, not far from Tuesday's record.

Market moves are expected to be modest as participants assess the potential repercussions of U.S. protectionist moves, said Tomoichiro Kubota, a senior market analyst at Matsui Securities.

There is still a risk that President Donald Trump may keep his campaign promise and impose significant tariffs on China, which could hurt the whole of Asia, said Vasu Menon, a senior investment strategist at OCBC Bank: " Xi Jinping is a strongman and his own actions in purging his rivals and corruption in China shows he will not shy away from taking an aggressive stance if Trump hits China with significant tariffs."

Still, China may act less aggressively if the tariffs are limited to steel and aluminum, which will have a relatively low impact on its economy, said BNP Paribas Investment Partners' head of Chinese stocks Caroline Yu Maurer. "That is why we haven't seen much retaliation," she said.

Oil futures were up, building on modest gains in the U.S. on Wednesday. Sharper-than-expected drops in U.S. fuel stockpiles outweighed concern over inventory gains in crude oil. Gold and silver prices were up.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

March 15, 2018 01:03 ET (05:03 GMT)

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