Vertiv Introduces New Single-Phase Uninterruptible Power Supply for Distributed Information Technology (IT) Networks and Edge Computing Applications in Europe, Middle East, and Africa (EMEA)Read more Students from JA Zimbabwe Win 2023 De La Vega Global Entrepreneurship AwardRead more Top International Prospects to Travel to Salt Lake City for Seventh Annual Basketball Without Borders Global CampRead more Rise of the Robots as Saudi Arabia Underscores Global Data and Artificial Intelligence (AI) Aspirations with DeepFest Debut at LEAP23Read more Somalia: ‘I sold the last three goats, they were likely to die’Read more Merck Foundation and African First Ladies marking World Cancer Day 2023 through 110 scholarships of Oncology Fellowships in 25 countriesRead more Supporting women leaders and aspirants to unleash their potentialRead more Fake medicines kill almost 500,000 sub-Saharan Africans a year: United Nations Office on Drugs and Crime (UNODC) reportRead more Climate crisis and migration: Greta Thunberg supports International Organization for Migration (IOM) over ‘life and death’ issueRead more United Nations (UN) Convenes Lake Chad Countries, Amid Growing Regional CrisisRead more

Most Asian markets rise but Taiwan fears keep confidence in check

show caption
Nancy Pelosi's visit to Taiwan has been met with anger in China, fuelling concerns about already-strained ties with the United States./AFP
Print Friendly and PDF

Aug 03, 2022 - 12:20 PM

HONG KONG, CHINA — Asian markets mostly rose Wednesday after the previous day’s reverse, though traders remained on edge after House Speaker Nancy Pelosi’s visit to Taiwan, which has further strained China-US ties and raised concerns about the long-term impact on the global outlook.

The highest profile trip to the island in 25 years by a US politician was met with condemnation from Beijing, which warned of serious economic and military consequences.

Taiwan said more than 20 Chinese military aircraft had flown into the island’s air defence identification zone — an area wider than its territorial airspace that overlaps with part of China’s air defence zone. The People’s Liberation Army was also due to conduct a series of drills, while Foreign Minister Wang Yi vowed to “punish” those who offended the country.

Beijing said it would suspend imports of some citrus fruits and fish from Taiwan over alleged “repeated” detection of excessive pesticide residue and positive coronavirus tests on packages, while exports of natural sand were also halted, with no details provided.

Taiwan President Tsai Ing-wen struck a defiant tone at her meeting with Pelosi, saying the island “will not back down. We will… continue to hold the line of defence for democracy”.

At the event, Pelosi said her delegation “came to Taiwan to make unequivocally clear we will not abandon our commitment to Taiwan”.

No one expected it would spark a conflict, but the crisis sent shivers through trading floors that were already on edge over a range of issues including the Ukraine war, surging inflation, rising interest rates and slowing economic growth.

However, Asia enjoyed a small recovery, though some markets pared morning gains.

Hong Kong, Taipei, Tokyo, Singapore, Seoul, Wellington, Jakarta and Manila all rose, though Shanghai, Mumbai, Sydney and Bangkok edged down.

London, Paris and Frankfurt all fell at the open.

The “short-term implication may be ‘sell the rumour, buy the news’ as the official response so far remains much more restrained versus what the market has feared,” Xiadong Bao, at Edmond de Rothschild Asset Management, said.

“But the mid/long-term implication can be more significant, which may be currently overlooked by the market. The official return of the US influence in Asia-Pacific will inevitably accelerate US-China decoupling.”

Analysts are also keen to find out what the White House’s response will be, particularly ahead of mid-term elections in November with anti-China rhetoric playing well with voters, but with President Joe Biden keen not to further harm economic ties.

SPI Asset Management’s Stephen Innes added that the US administration was probably not likely to cut Trump-era tariffs before then.

The broadly positive performance in Asia followed a drop on Wall Street, where the Taiwan crisis was compounded by a series of hawkish comments from Federal Reserve officials indicating more big interest rate hikes could still be in the pipeline.

Stocks rallied last week and Treasury yields dropped after boss Jerome Powell hinted the bank could begin slowing down, but the latest remarks suggest a hoped-for dovish pivot might not be coming just yet as inflation remains stubbornly high.

“This round of Fed speak suggests markets might be a little too optimistic into pricing in a Fed pivot and that rate cut calls for next year are too optimistic,” said OANDA’s Edward Moya.

The latest developments have raised concerns that the volatility on markets would likely continue for some time.

“It’s hard to see any meaningful upside in equities right now,” said Xi Qiao, of UBS Group. “The market is going to trade pretty mixed, stay choppy until we have a little bit more certainty,” she told Bloomberg News.

Key figures at around 0720 GMT 

Tokyo – Nikkei 225: UP 0.5 percent at 27,741.90 (close)

Hong Kong – Hang Seng Index: UP 0.2 percent at 19,722.54

Shanghai – Composite: DOWN 0.7 percent at 3,163.67 (close)

Taipei – TAIEX: DOWN 0.2 percent at 14,777.02

London – FTSE 100: DOWN 0.3 percent at 7,387.34

Dollar/yen: DOWN at 133.07 yen from 133.10 yen Tuesday

Euro/dollar: DOWN at $1.0160 from $1.0168

Pound/dollar: UP at $1.2169 from $1.2163

Euro/pound: UP at 83.50 pence from 83.57 pence

West Texas Intermediate: DOWN 0.3 percent at $94.14 per barrel

Brent North Sea crude: DOWN 0.3 percent at $100.29 per barrel

New York – Dow: DOWN 1.2 percent at 32,396.17 (close)

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.