- Risk-off remains in play amid sluggish data, challenges to global trade and geopolitical worries.
- Sovereign bonds flash recession fears with an extended downturn.
Asian stocks aptly portrayed gloomy market sentiment after the US President Donald Trump added Mexico in the list to bear the burden of trade protectionism.
In addition to 5% tariff hikes on Mexican goods, which can rise to 25% till October, news that China’s Huawei repatriated the US workers and geopolitical tension between Iran and Iraq also damaged global risk tone.
However, the latest news that the US-China leaders are to meet at the sidelines of G20 meeting in late-June month offered a halt in the rush to risk-safety.
Adding to the woes was China’s disappointing PMI data wherein manufacturing gauge slipped into contraction region.
Pessimism surrounding global trade and geopolitical tension triggered recession fears that stretched the global risk barometer 10-year US treasury yield further down towards September 2017 low by losing more than 5 pips to 2.173% while writing.
Wall Street registered pullbacks in headline indices during final hour trading while MSCI’s Asia index ex-Japan bucked the trend with near 0.3% gains.
Japan’s Nikkei slipped more than 1.3% whereas China’s Hang Seng lost around 0.2%. Further, Australia’s ASX remains mostly unchanged in expectations of further easing from its largest customer while New Zealand’s NZX50 is gaining +0.5% by the press time. Additionally, India’s BSE Sensex was also among the gainers with +0.60% in the pocket due to domestic positives.
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