Asian markets were mostly lower on Friday, ending a week of losses with more losses. The increasing trade tensions were simply too much for markets to bear in this past week, and broad based losses across the region were the result. Australia’s S&P/ASX 200 fell the most, losing 2.8% for the week as it’s now fallen for seven consecutive sessions. Japan’s Nikkei was in a similar predicament, falling for six straight sessions and losing 2.5% last week. It’s the longest losing streak for the Japanese benchmark index since January and was partially in response to twin natural disasters; a crippling typhoon that hit the Western coast of Japan on Tuesday, and a major earthquake that struck the northern island of Hokkaido on Thursday. Chinese markets continued to slump, with the Hang Seng in Hong Kong 2.3% lower for the week, while mainland China’s Shanghai Composite lost 0.8%. Rounding things out, South Korea’s Kospi ended the week with a 1.7% loss as global technology shares sank.
The upcoming week could see a continuation of the downward trend across Asia as there’s no relief in sight for the current trade issues. Japan is also looking at losses for its insurance sector, which hasn’t responded yet to the losses it is likely to face on claims following the typhoon and earthquake of last week. Mainland China and Hong Kong investors will be returning to face additional tariffs on $200 billion worth of Chinese goods from the U.S. and Australia will also face more losses due to the Chinese tariffs. There could be hope for South Korea if the rout in technology shares ends, but that remains to be seen.
European markets finished a depressing week for investors with a slight gain, but it did very little to pare weekly losses that were caused by rising concerns over U.S. trade policies and worries that the U.K. might face a no-deal Brexit this coming March. For the week the Stoxx Europe 600 was lower by 2.2%, while Germany’s DAX underperformed as it lost 3.3% and the CAC 40 in France fell 2.9%. The small Friday gains helped snap a three session losing streak for the Stoxx and CAC 40, while the DAX halted a four session losing streak. In the U.K. the FTSE had its own four session losing streak, which was still running at the close Friday as the U.K. benchmark equity index lost 2.1% on a weekly basis.
The coming week could be just as bad for European equities after President Trump indicated late Friday that he could have more tariffs in store for China, and rumors emerged that Japan could be the next country targeted for U.S. tariffs. The FTSE will almost certainly remain under pressure due to the Brexit issue. On the one side the FTSE has been falling on news of a no-deal Brexit, but any time such an idea is countered the Pound sterling rallies, and that pushes equities lower as well. Right now it looks like a no-win situation for British equities.
U.S. markets fell on Friday, with the Nasdaq and S&P 500 both posting a fourth consecutive losing session. Trade issues remain at the forefront, with investor sentiment taking a further hit on Friday after President Trump said he’s ready to impose tariffs on another $267 billion in Chinese goods. There were also rumors that the next target for Trump’s tariffs will be Japan. The weekly results for markets were mostly bad, with the Nasdaq seriously underperforming as it lost 2.6% for the week. The S&P 500 did better as it was down just 1.0% and the Dow Industrials, which remained close to unchanged levels in all four sessions of the past week, fell just 0.2% for the week.
The coming week could see poor performance as well as trade issues are nearly certain to continue. Investors are also dealing with the increased prospect of U.S. rate hikes after Friday’s release of employment data showed wage growth climbing 2.9% in August, which was substantially higher than the 2.7% increase expected. The Nasdaq could see improvement in the coming week however, if the drop in technology was nothing more than profit taking and not a secular shift.
Gold fell another 0.5% on a weekly basis, making this the eighth time in the past nine weeks that gold has posted a weekly decline. The end of the week featured stronger than expected U.S. employment and wage growth, which supported the chances of further U.S. interest rate hikes. The coming week will likely see the U.S. dollar getting a boost from the increased interest rate hike chances, and that will keep pressure on gold in the coming week.
Crude fell for the first time in four weeks as traders worried about falling demand in the wake of continued trade issues between the U.S. and many of its trading partners. The U.S. benchmark West Texas Intermediate crude was down 2.9% for the week, while global benchmark Brent crude fell 2.1% on a weekly basis. One bright spot came at the end of the week as the U.S. posted a larger than expected decline in inventories, which could help keep crude higher in the coming week.
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