Asian stocks falter as investors gauge stimulus hopes against Sino-U.S. Tensions

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SHANGHAI (Reuters) – Asian stocks faltered on Thursday as investors weighed in hopes of a greater stimulus to prop up economies stricken by a pandemic against a dramatic rise in tensions between the United States and China.

FILE PHOTO: A security guard wearing a face mask stands near the Bund Financial Bull statue and a screen showing an image of a medical worker following the novel coronavirus (COVID-19) outbreak, on the Bund in Shanghai, China on March 18, 2020. REUTERS / Aly Song / File Photo

European stocks were aimed at gains, with pan-regional Euro Stoxx 50 futures up 0.36%, German DAX futures up 0.27% and FTSE futures up 0.11% in the first transactions.

S&P mini-futures added 0.09%.

Washington’s order in Beijing to shut down its consulate in Houston, Texas, amid espionage charges, weighed on risk sentiment earlier in Asia, pushing shares down.

China said the order was an “unprecedented escalation” from Washington, and a source said Beijing was considering closing the US consulate in Wuhan in retaliation.

US President Donald Trump has said further consulate closures are “still possible”.

But in the afternoon in Asia, the largest MSCI index of Asian stocks outside Japan was 0.18% higher as Chinese stocks reduced their losses. The Shanghai benchmark fell 0.6% after falling more than 2% earlier.

Australian stocks recovered to rise 0.25% and the Hong Kong Hang Seng Index was 0.43% higher.

Futures on Nikkei posted a gain of 0.09% to 22,805 as Japanese markets were closed for a holiday.

Unprecedented stimulus measures to boost struggling economies would continue to provide structural support to riskier assets, said Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore.

“The forces of liquidity are just unmatched… we see what happened after the GFC, but we see it on steroids,” he said.

“Rarely do you see both monetary and fiscal policy activated, and then when they are, they are only activated for a little while.”

At the same time, a further escalation of Sino-U.S. Tensions was increasingly likely, with the breakdown of the phase 1 trade agreement between China and the United States posing the greatest near-term risk for the markets, did he declare.

Investors will also be closely monitoring weekly US unemployment claims figures due at 12:30 p.m. GMT for the latest indications on how the novel coronavirus pandemic has affected the US economy. The United States recorded more than 1,100 new coronavirus deaths for a second day in a row Wednesday.

Overnight, the Dow Jones Industrial Average rose 0.62%, the S&P 500 rose 0.57% and the Nasdaq Composite rose 0.24%.

On Thursday, in commodities markets, spot gold fell 0.12% to $ 1,869.57 an ounce, but remained near a nine-year high, with prices rising more 23% over the year. Investors flocked to the safe haven metal as they sought shelter from a possible turnaround in US stocks.

Gold was helped by a weak dollar, which remained in the doldrums for more than four months low on Thursday, slackening 0.16% to 94.860.

The greenback was little changed against the yen at 107.15, while the euro climbed 0.16% to buy $ 1.1587, near a 21-month high.

Oil prices edged up, with US crude adding 4 cents to $ 41.94 per barrel and global benchmark Brent crude up 2 cents to $ 44.31 per barrel.

Reporting by Andrew Galbraith and Elizabeth Dilts Marshall in NEW YORK; Edited by Kim Coghill

Our standards:Thomson Reuters Trust Principles.

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