Asia Pacific markets traded mixed on Monday morning as investors remained cautious over global growth prospects while Chinese President Xi Jinping tried to position China as globalization champion in a major speech.
Xi’s opening speech kicked off the week-long China International Import Expo that seeks to promote the world’s second largest economy as a major consumer of global goods. The event, announced more than a year ago, will stand in contrast to the ongoing trade fight between Beijing and Washington.
During the speech, Xi repeated his rhetoric against protectionism and promoted his country as an advocate for international openness and cooperation. He discussed at length about the benefits of an open international economy and said that China is pursuing “a new round of high-standard opening up” to broaden market access to the rest of the world.
The United States has levied tariffs on an extensive list of Chinese products. Beijing, for its part, unsuccessfully tried to negotiate on tariffs by offering to buy more U.S. goods, but ultimately responded with duties on products from the U.S.
The impact of the ongoing trade war is being felt as companies report higher production costs and trim outlook. On Friday, Chinese tech giant Alibaba lowered its full-year sales forecast, citing concerns about the economic impact of the trade war.
Xi’s speech at the expo comes a day before Americans head to the polls for midterm elections.
In Japan, the Nikkei 225 fell 1.16 percent in morning trade while the Topix index declined 0.76 percent. South Korea’s Kospi fell 1.61 percent.
Chinese shares traded mixed: The Shanghai composite was down 0.65 percent while the Shenzhen composite traded near flat. In Hong Kong, the Hang Seng index was down 2.11 percent.
The on-shore yuan traded at 6.9059 to the dollar while the off-shore yuan fetched 6.9016. China’s central bank set the yuan mid-point at 6.8976 against the greenback — the People’s Bank of China allows the exchange rate for the on-shore yuan to rise or fall 2 percent from the official midpoint rate set every morning.
Australia’s ASX 200 erased most of its early losses to trade flat but many of the sectors were still down. The energy sector was off 0.9 percent as oil stocks mostly sold off. Shares of Santos fell 0.93 percent, Oil Search was down 1.17 percent and Woodside Petroleum declined 1.7 percent.
Oil prices will be closely watched as U.S. sanctions on Iran are set to snap back in place on Monday.
Last week, reports said that President Donald Trump‘s administration will grant eight jurisdictions special exceptions to continue importing oil from Tehran, with the idea that they will gradually reduce their purchases over time. Oil prices fell last Friday on the back of that news as investors remained concerned about oversupply in the market.
U.S. crude traded down 0.68 percent at $62.71 a barrel Monday morning while global benchmark Brent was down 0.54 percent at $72.44.
Central banks in the United States, Australia and New Zealand are set to meet this week.
“There is not expected to be any change in policy from either central bank. But we continue to expect the Fed to lift interest rates 25 bpts in December to 2.50 (percent),” Richard Grace, chief currency strategist and head of international economics at the Commonwealth Bank, wrote in a morning note.
Slowing global growth remains a concern for investors — last month, the International Monetary Fund cut global growth forecast, citing trade tensions between the U.S. and its trading partners.
There have been other indications of a slowdown in growth momentum, including a decline in Purchasing Managers Indexes, an indicator of economic health in the manufacturing and services sectors, across much of Asia, according to Felicity Emmett from ANZ Research.
“In an environment of cooling growth and declining liquidity, market volatility seems unlikely to decline to the soporific days of old any time soon,” Emmett said in a morning note.
In the currency market, the dollar index, which measures the U.S. currency against a basket of its peers, traded at 96.478, down from an earlier high of 96.490.
The Japanese yen traded at 113.17 to the dollar while the Australian dollar traded at $0.7185.
— CNBC’s Evelyn Cheng contributed to this report.
