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  • Asia session equities are again on the retreat as China’s Yuan slide in Friday’s early trading sends traders scurrying for cover.
  • Trade war tensions remain just beneath the surface, and promise to derail buyers’ plans at a moment’s notice.

Asian equities slid back after several days of tentative gains, driven into the red by a steeply-discounted Yuan which fell into one-year lows, and traders are fearing another flare-up of the US-China trade dispute as the People’s Bank of China (PBOC) tests the limits of what the US will allow before once again deeming China a currency manipulator. As explained by Reuters :  

“There are several channels through which the yuan’s weakening is hitting Asian stocks. First, a weaker yuan challenges the competitiveness of other Asian economies,” said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.  “The weaker currency also causes fears of capital leaving China and disrupting their capital markets, which could have knock-on effects on Asia. Lastly, a weaker yuan deepens trade war concerns.”

 – Reuters

Asian stock markets have been on-edge amidst the recent trade-war flare up, and tensions are expected to remain steady in the run-up to the EU’s trade delegation to Washington next week, who are preparing a list of retaliatory tariffs if the US goes ahead with applying far-reaching tariffs on all automobile imports.

Japan’s leading Nikkei 225 index is down -0.85%, with Tokyo’s Topix index also in the red for -0.70% for Friday, while Hong Kong’s Hang Seng and Shanghai’s CSI 300 index are off by -0.45% and -0.25% respectively, with the MSCI broad Asia-Pacific index down -0.35% to cap off the week.

Nikkei 225 levels to watch

Japan’s leading equity index is sharply off the day’s highs at 22,878.00, currently trading near 22,650.00 after reaching a Friday low of 22,540.00. Hopeful bulls will be looking to make a determined push back over Thursday’s high of 22,930.00 in the coming week, while short-sellers will be looking to extend the current bearish slide beyond the week’s lows to test last week’s swing high of 22,325.00.