Hang Seng drags Asian stocks as Hong Kong bill intensify trade angst

• US-China trade row turns severe after the US Congress passes the Hong Kong bill.
• Mixed responses from China/Hong Kong diplomats fail to impress Asian equity buyers.
• FOMC minutes turned out as a non-event, eyes on the US second-tier housing/manufacturing data, more Fedspeak.

With the global ire over the US-China trade differences beating equities from the front and the center, Asian stocks keep the red while heading into the European session on Thursday.

The United States (US) President Donald Trump’s initial dissatisfaction from the Chinese proposals triggered the risk aversion wave during early Asian hours. The pessimism got severe after the US House of Representatives passed the Hong Kong Human Rights Bill. Though, China’s Vice Premier Liu He still stays “cautiously optimistic” as the US President Trump has the right to use veto and turn down the bill that can extend meddling in Hong Kong protests. It’s worth mentioning that most market forecasts, including that from Reuters and Bloomberg signal the Republican leader will not stop the bill from being the law.

On the positive side, Standard Chartered cited improvement in China’s manufacturing while India announced measures to help the struggling economy, which Moody’s anticipated to soften soon.

With this, the MSCI’s index of Asia-Pacific shares outside Japan dropped 1.3% while Japan’s NIKKEI liquidates around 0.80% of gains earned previously. Further, the US 10-year Treasury yields and the S&P 500 Futures stay sluggish around 1.73% and 3,100 respectively.

Looking at the market-specific performances, Hong Kong’s HANG SENG and Philippines’ PSEI Composite lead the way to the south with more than 1.5% losses by the press time. On the other hand, India’s BSE SENSEX seems to be the least affected with -0.16% figures by the time of writing the article. Furthermore, stocks in China, Australia and New Zealand were all in red.

While minutes of the Federal Open Market Committee’s (FOMC) latest monetary policy meeting failed to offer any clear guidelines to the global markets, investors will keep eyes on the second-tier housing and manufacturing data, not to forget the Fedspeak, from the US. On the Asian front, monetary policy decision by the Bank Indonesia will be observed where no change in the benchmark rate of 5.0% is expected.