- Risk-on grabs the spotlight following concerns over the US-China trade truce and likely tariffs on the EU goods.
- Sluggish China PMI provided additional support to bears.
With the White House Trade Adviser and China’s SCMP both raising doubts over the recently agreed trade ceasefire between the US and China, Asian shares drop on early Wednesday. Adding to the pessimism was China’s Caixin Services Purchasing Managers’ Index (PMI) for June that joined previously disappointing activity indices while slumping to 4-month low.
In reaction, the MSCI’s measure of Asia Pacific shares out of Japan trimmed initial gains to hold tightly around no change zone while Japan’s Nikkei losses around 0.8% by the press time.
China’s Hang Seng marks 0.20% loss by the time of writing but shares on Australia’s ASX 200 and New Zealand’s NZX 50 benefit from Australian and New Zealand’s second-tier data.
Furthermore, Vietnam’s Ho Chi Minh Stock Index/ VN Index had to bear the burden of fresh US tariffs on steel products from the Asian country while India’s BSE Sensex remain mostly flat due to lack of major catalysts.
Macro gauge of risk sentiment, the US 10-year treasury yield, slips beneath 2.0% mark to 1.953% by losing nearly 2 basis points (bps) ahead of the European market opens.
Looking forward, the US ADP Employment Change, an early signal for Friday’s headline Nonfarm Payrolls (NFP) will be closely followed. The jobs number is expected to rise to 140K from 27K previous readouts during June.
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