Asian equities flirt with nine-month low

TOKYO (Reuters) – Asian stocks fell Thursday to nine-month lows following growing US administration worries about global economic growth, though it seems to be changing its approach to curb Chinese investment in companies US.

US oil prices hit a 3-1 / 2-year high as declining US stocks plunged concerns over an already uncertain market for Libyan exports, a disruption in Canadian production, and Washington's demands importers stop buying Iranian crude.

The MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.25% to a nine-month low at the start of trade while Japan's Nikkei lost 0.30 %.

The US S & P 500 lost 0.60% on Wednesday at its lowest close of a month.

MSCI's largest global stock market indicator fell to its lowest level in nearly three months, of course to post its fourth month of losses in the last five months. Its emerging markets index has reached its lowest level since mid-August.

In China, markets have been hit hard by worries over a faltering yuan and trade with the US has left investors preparing for a tough final six months a year.

This will keep traders focused on Chinese stocks that were hit by mbadive sales on Wednesday, as blue chips dropped to their worst loss in more than a year.

Trump said on Wednesday that he would use a strengthened national security review process to thwart Chinese acquisitions of sensitive US technologies, a more flexible approach than imposing China-specific investment restrictions. .

Although US equities initially took off, optimism quickly evaporated after White House economic adviser Larry Kudlow declared that the plan announced by Trump did not indicate a relaxed position on China.

Markets remain worried about Trump's uncompromising approach to getting better trade deals, with warning signs of his position not only backfiring but also hurting the global economy.

Two major US auto trade groups warned Wednesday the administration that the imposition of 25% duty on imported vehicles would cost hundreds of thousands of auto jobs, would significantly increase vehicle prices and threaten the expense of motorists.

The move came after the American motorcycle manufacturer Harley-Davidson Inc. said earlier this week that it would move production to European customers overseas to avoid retaliatory rates.

"Initially, investors saw Trump's moves as bargaining tactics to get better deals, but now they are starting to worry about damage to the economy," said chief strategist Mutsumi Kagawa. at Rakuten Securities.

"People have long thought that the US economy would end up in a recession at some point, but there are growing concerns that Trump's trade policies may accelerate." The fear is now that "America First" could become "America Worst," he added.

The yield on 10-year US Treasury bonds dropped to 2.827%, coming close to its May 29th low of 2.759%.

In a worrying environment for some investors, the US yield curve has further flattened, with the gap between two- and 10-year yields narrowing to a low of 32 basis points in 10 years. 0.32 percentage point.

Historically, the US economy has tended to go into recession after the l '. The gap has narrowed to less than zero per cent, reversing the yield curve.

The decline in US bond yields occurred despite inflationary pressures from higher oil prices.

US crude oil futures jumped 3.16% on Wednesday, reaching $ 73.06 per barrel, the highest level since November 28, 2014, under the effect of a tightening of l & # 39; offer.

US crude inventories fell by nearly 10 million barrels last week, while the drop in Canadian exports helped drain the heavy crude oil supply in North America.

US demand from other countries to cut off all Iranian oil imports is also seen as fueling a shortage while a power struggle in Libya has left uncertain whether the internationally recognized government or the rebels would handle exports of oil. oil.

Futures contracts on US crude traded for the last time at $ 72.50 per barrel, down 0.37% in early Asian trade.

On the other hand, copper, considered a barometer of the strength of the global economy because of its wide industrial use, reached its lowest level in three months, or $ 6,692.5 a year. tonne.

In the currency market, the major currencies were overshadowing the uncertainties badociated with the escalation of trade tensions.

The euro was hit by concerns over political uncertainty in Germany, although Chancellor Angela Merkel's coalition partner said she was not seeking to split the government.

The common currency is set at $ 1,1561, coming close to the low of $ 1,1508 recorded a week ago.

The dollar has changed hands at 110.26 yen, up slightly but in its narrow range of trading over the past month. The currency pair is on track to post its smallest monthly spread to nearly four months this month.