Asian stocks remain on back foot amid risk aversion

• Asian equities remained mostly in losses at the Monday’s start on risk-off sentiments.
• Worries concerning US-China trade deal, Brexit and global economic growth remained in highlight.

Asian stocks stretched Friday’s losses forward during initial Monday as risk aversion pushed global investors off equities. The US-China trade talks, worries concerning global growth and the US politics are likely main catalysts challenging market optimism. With the traders avoiding stocks in search of safety, the US Dollar extended previous gains on its safe haven appeal.

Markets in China remained mostly volatile as an opening after a weeklong holiday pushed investors to act on the news already out. The MSCI’s Asia Pacific Index outside Japan was down 0.1% whereas shares in Australia and South Korea were down 0.6% and 0.2% respectively. It should also be noted that Japanese markets are off due to National Foundation Day.

Latest  comments from the US policymakers are indicating a tough road ahead of negotiations begin in Beijing between the US and Chinese decision makers. The US team includes trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin while Chinese leaders comprises President’s top aide Liu He among others. Both the sides will begin two-day discussion on February 14.

Recently, the White House Adviser Larry Kudlow dimmed prospects of a successful trade deal with China by mentioning that both the sides are too far from any solution. Adding to that, the US President Donald Trump worsened the sentiments by declining to meet Chinese President before the end of 90-day negotiation period on March 01.

On the other hand, intermediate spending to the US government offices will come to an end on Friday before which the policymakers have to be ready with a plan otherwise another showdown will begin. Mr. Trump is tough on his demand surrounding Mexico while opposition is ready for technological advancements for security but not the border.

Moreover, issues concerning Brexit and expected weakness in global growth continues to question equity market performance.

Hence, while US-China deal is a major factor driving risk-off, uncertainty concerning Brexit and global growth can add weakness into the stocks unless any positive developments.