Asian equities fear faster rate hike and uncertainty over US-China trade

Asian equities were hammered on Monday as fears of a faster rate hike in the US and the uncertainty surrounding the Sino-US trade war tarnished sentiment of risk, while the pound sterling reached a two – week high in the hope of a good Brexit.

The broader MSCI index of Asia-Pacific equities out of Japan stumbled at more than 1%, but it was still sidelined from a 1-1 / 2-year low last week.

Japan's Nikkei fell 1.2%, while South Korea's KOSPI dropped 1.8%.

Chinese stocks opened in red with a 1% reduction in blue-chip stocks, while President Xi Jinping had promised to cut import tariffs and continue to expand market access.

Xi, however, acknowledged that conditions abroad had created challenges for the Chinese economy.

US equity futures fell 0.3% after Wall Street closed in the red on Friday, due to optimistic job growth for October and a trade deal between the United States and the US. China that may not be concluded soon.

"We expect trade tensions between the US and China to get worse before they improve," said Citi analysts.

"Although trade growth has continued, business surveys are raising more and more concerns," they added.

"The stock markets do not yet seem to fully integrate the risks of escalating tensions, which could have an effect on investment, sentiment, inflation and growth."

Feelings are also expected to be nervous before the mid-term congressional elections on Tuesday.

Opinion polls show the Democratic Party is likely to gain control of the House of Representatives after two years of non-exercise of political power in Washington, with President Donald Trump's Republican Party likely to lead the Senate.

The prospect of tighter monetary policy in the United States also darkens the outlook for global equities, given robust economic data in recent months.

The United States announced solid job growth in October, with annual wage increases reaching a nine-and-a-half year high, further reinforcing expectations of a rate hike in December.

"The US jobs report confirms our view that the Federal Reserve will raise rates three more times by mid-2019," Capital Economics said in a note.

"After that, we suspect that the cumulative effect of tighter monetary policy will begin to weigh on the US economy, forcing the Fed to end its tightening cycle and resulting in lower Treasury yields. , the US market and the dollar "

STERLING SHINES

The pound sterling hit a two-week high on Monday in the face of a good Brexit hope, while Asian stocks began the week with delicacy amid worries over tension in China's trade relations. US.

At five months of Britain, divorce talks in the European Union are in stalemate, fueling sharp uncertainties within the business world and a pound sterling on any new issues. a possible progress of the negotiations.

A Sunday Times reports that he is an all-British. The customs agreement will be included in the agreement governing the withdrawal of Britain from the European Union and was enough to encourage investors who had sent the pound sterling at 1.3062 USD, the highest level since 22 October.

The currency weakened in seven of the ten months of this year and lost up to 3.6%. It was up 0.2 percent at $ 1.2989.

The Prime Minister's Office said the Sunday Times report was hypothetical, but added that 95% of the withdrawal agreement was settled and negotiations were continuing.

The US dollar struggled to keep the gains on Friday following optimistic data on jobs. The dollar index, which measures the greenback versus a basket of major currencies, recently fell 0.1% to 96.459.

Against the yen refuge, the dollar has remained at 113.17. The euro was flat at $ 1,1387.

In the commodities sector, oil prices fell as US sanctions against Iranian exports of Iranian fuels were mitigated by exemptions that allowed some countries to import at least temporarily Iranian crude oil.

US crude fell 42 cents to 62.68 dollars a barrel and Brent was last at 72.41 dollars, down 46 cents.

The price of gold has been maintained near the highs of a week and a half in the face of strong festive demand from India, the world's largest buyer. That was the last minus at $ 1,232.2 an ounce.