TOKYO, June 11 2018 : Asian stocks moved gingerly today as a weekend G7 summit fanned trade conflict fears after U.S. President Donald Trump backed out of a joint communique in a blow to the group’s efforts to show a united front.
Trump’s reversal, announced while he was en route to Singapore for a meeting with North Korean leader Kim Jong Un, sent his Group of Seven partners scrambling.
“The G7 meeting in Canada reiterated the growing rift between Washington and its allies over free trade,” wrote Tai Hui, chief market strategist for Asia Pacific at J.P. Morgan Asset Management.
“Business confidence, and subsequently capital spending, is at risk if this tension continues through the summer,” he said, adding that central bank meetings will be critical events this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.05 percent.
The Federal Reserve holds a two-day meeting starting on June 12, and it is widely expected to raise interest rates for the second time this year. The focus is on whether the central bank will hint at raising rates a total of four times in 2018.
The European Central Bank meets on June 14 and it could signal intentions to start unwinding its massive bond purchasing program.
This morning, the dollar slipped against the yen, which often draws demand in times of market turmoil and political tensions.
The greenback was down 0.15 percent at 109.420 yen JPY=.
The Canadian dollar, which has been dogged by fears Trump may scrap the North American Free Trade Agreement (NAFTA), fell 0.35 percent to C$1.2975 CAD=D4 per dollar.
The euro EUR=, which was lifted last week amid the prospect of the ECB signaling its exit from easy policy, was 0.1 percent higher at $1.1782 .
The dollar index against a basket of six major currencies was a shade lower at 93.500.
Brent crude futures were down 0.1 percent at $76.38 a barrel. – Reuters