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© Reuters. FILE PHOTO: Passersby are standing in front of an electronic board displaying the Japanese average Nikkei and the stock price index of various countries outside a broker in Tokyo.
By Tomo Uetake and Noah Sin
SYDNEY / HONG KONG (Reuters) – Asian stocks fell Thursday to an eight-week low as investors waited to see if Chinese and US trade negotiators could save an agreement to counter the threat of further US tariff increases which would undermine global economic growth.
Chinese Vice Premier Liu He is scheduled for talks Thursday and Friday in Washington with US officials who have complained that Beijing has backtracked on previous commitments.
An agreement could avoid a sharp rise in US tariffs on Chinese products that President Donald Trump threatened to impose on Friday. China has threatened to take retaliatory measures, increasing the risk of a major escalation of the deadly trade war between the world's two largest economies.
"If Trump's threat becomes reality, it would be a game changer for the global economy, the worst case scenario we modeled last year, which led to a recession in the United States, a rapid reduction in growth. in China and a slowdown in global growth Steve Cochrane, chief economist for APAC at Moody's Analytics in Singapore.
European equities should open down, with a 0.5% decline for the whole region, and 0.4% for Germany, and a lower futures contract of 0, 3% at the beginning of the exchanges.
In Asia, the broadest index of the Asia-Pacific equities market (MSCI) excluding Japan fell more than 1% to its lowest level since March 11th.
The shares extended their past losses in Asian trade after US President Donald Trump told a rally of supporters that China had "broken the deal" and paid the price.
The Chinese market plummeted and hit its lowest level in two and a half months. Shanghai shares slipped 0.8%, CSI 300 1% and Hong Kong 1.7%.
Japan's average fell by 0.9% to its lowest level in five weeks, South Korea by more than 2% and Australia by 0.5%.
Trump has threatened to raise tariffs to 25% from 10% on 200 billion dollars of Chinese imports at 12:01 pm ET (0401GMT) on Friday. Beijing is committed to retaliate without giving details.
Kazuhiko Fuji, senior researcher at RIETI, a think tank affiliated with the Japanese government, said the talks seemed fragile.
"I guess the US is just going to give China an ultimatum, so it's no surprise that the US yield curve is almost inverted again," he said.
The yield spread between 3-month bills and 10-year notes has narrowed to 3 basis points from around 15 points a few weeks ago.
The tightly watched spread turned negative at the end of March, scary investors, who believe that this development suggests a future recession.
The benchmark index is set at 2.469%, after reaching its five-week low of 2.426% on Wednesday.
Wall Street shares ended a staccato session to drop overnight, with a marginal increase of 0.2% and 0.3%, respectively. ()
In the currency market, the pound sterling is weakening, suggesting that the Brexit talks between the British government and the main opposition party may soon collapse.
The pound fell below the psychologically key level of $ 1.30, reaching a minimum of six days in a day and trading at $ 1.3019.
The balance against a basket of six major peers was down 0.06% to 97.561, the other major currencies being also confined to well-used ranges. The euro was little changed at 1.1194 USD and the Japanese yen rose slightly by 0.2% against the greenback to settle at 109.92 yen.
In the commodities market, oil prices fell on Thursday due to concerns over the escalating trade battle between Canada and the United States, despite an unexpected fall in inventories.
futures contracts fell 0.6% to $ 69.92 per barrel, while US crude West Texas Intermediate (WTI) also fell 0.6% to $ 61.75 per barrel.
Shanghai's industrial metals fell on Thursday early in the session, as the London benchmark reached its lowest level in nearly three months, as investors sought security ahead of trade negotiations.
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