Asian markets fell — though were last above session lows — on Tuesday after the U.S. Justice Department unsealed criminal charges against China’s Huawei, its subsidiaries and a top executive ahead of trade talks.
Japan’s Nikkei 225 index
slipped 0.7% and the Kospi
in South Korea shed 0.2%. Hong Kong’s Hang Seng index
was 0.5% lower and the Shanghai Composite index
fell 0.5%. Australia’s S&P ASX 200
, reopening after a holiday, eased 0.4%. Stocks fell in Taiwan
and Singapore
but rose in Indonesia
.
Among individual stocks, SoftBank Group
, Sony
and Nintendo
declined in Tokyo trading. Samsung
and steel maker Posco
slipped in South Korea. Casino operator Galaxy Entertainment
and Apple supplier AAC
rose in Hong Kong, while Geely Automobile
and oil producer CNOOC
fell. Taiwan Semiconductor
tumbled after reports that a chemical defect had damaged its production.
U.S. stocks fell Monday on signs that slowing Chinese growth was affecting corporate America. Caterpillar
, considered an economic bellwether, reported weaker-than-expected earnings for the fourth quarter of 2018. The company said it expects the growth of construction equipment sales in China to be flat this year. Chipmaker Nvidia
slashed its fourth-quarter revenue estimate, citing slowing demand in China among other reasons. The S&P 500 index
lost 0.8% to 2,643.85. The Dow Jones Industrial Average
was down 0.8% at 24,528.22 and the Nasdaq composite
gave up 1.1% to 7,085.68.
The U.S. criminal charges against Chinese tech giant Huawei allege that it violated U.S. sanctions by using a Hong Kong shell company to sell equipment in Iran. The company is also accused of stealing trade secrets, including technology behind a robotic device that T-Mobile
used to test smartphones. Several of Huawei’s subsidiaries and its chief financial officer Meng Wanzhou were to also face criminal charges. Meng was arrested while changing flights in Canada last month. China has demanded her release and warned of retaliation against American and Canadian executives.
Treasury Secretary Steven Mnuchin said at a briefing Monday that President Donald Trump is set to meet Chinese Vice Premier Liu He in Washington. Negotiators from both countries are expected to sit down for two days of trade talks starting Wednesday. While a meeting with Trump may show that the U.S. is serious about striking a deal, charges against Huawei could cast a cloud over negotiations going forward.
Charges against Huawei “illustrate the risks attached to the U.S.-China relationship,” DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary. “The actions by the DOJ show that it would not be enough for China to buy more U.S. goods. America wants China to make structural reforms especially on its intellectual property practices,” they added.
Benchmark U.S. crude
added 20 cents to $52.19 per barrel in electronic trading on the New York Mercantile Exchange. It dropped $1.70 to settle at $51.99 per barrel on Monday. Brent crude
, used to price international oils, rose 15 cents to $59.96 per barrel. It lost $1.78 to $59.81 per barrel in London.
The dollar
was trading at 109.12 yen down from 109.35 yen late Monday.
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