Asia Traders Look for a Time Out as Losses Mount: Taking Stock

(Bloomberg) -- Asian investors hoping for some sort of breather amid the trade war market carnage are dusting off their technical indicators.

A number of signs are emerging in the region’s markets the selloff may be due for a pause, with the MSCI Asia Pacific Index approaching its most oversold level since 2016, according to a relative strength indicator. Equity benchmarks in Japan, Korea and Hong Kong are also at or approaching similar oversold territory using the same indicator.

Asia Traders Look for a Time Out as Losses Mount: Taking Stock

While there was still no stopping the sell train on Tuesday, losses were less pronounced than in the U.S. overnight, with Asia Pacific stocks retreating as much as 1.4% for a sixth day of losses in the past seven trading days. The Hang Seng Index paced declines as Hong Kong traders got back to work following a holiday.

The Shanghai Shenzhen CSI 300 Index fluctuated while Korean shares posted modest gains. U.S. futures ticked higher, as investors in China and the U.S. parsed the latest missives from the two sides, in search of a trade war detente.

“I have a feeling it’s going to be very successful,” President Donald Trump said at an Iftar dinner at the White House, with it becoming apparent “in about three or four weeks” whether trade talks with China would be a success.

Trump said he’ll meet Chinese President Xi Jinping at next month’s G-20 summit, even as the U.S. unveiled a list of about $300 billion worth of Chinese products threatened to be hit with 25% tariffs.

There will be more potential market catalysts as soon as tomorrow, with China’s largest companies in Alibaba Group Holding Ltd. and Tencent Holdings Ltd. set to report quarterly results, offering a fresh glimpse into how the country is coping with the trade conflict.

“The market pricing of May agreement between China and the U.S. was always optimistic, however a deal can still be achieved,” said Kerry Craig, global market strategist with JPMorgan Asset Management, in a note to clients.

A note of caution for investors hoping the worst of the selling is already behind us: there is still room for more downside in equities, with both U.S. and Shanghai stocks still boasting healthy advances on the year, up 12% and 16% respectively.

“Politicians may be willing to focus less on the market impact until things get more severe,” Craig said. “Investors should prepare themselves for more volatile markets, but always have an eye on where value is created when sentiment can cause markets to swing too far in one direction.”

Stock Market Summary

  • MSCI Asia Pacific Index down 0.9%
  • Japan’s Topix index down 0.5%; Nikkei 225 down 0.6%
  • Hong Kong’s Hang Seng Index down 1.6%; Hang Seng China Enterprises down 1.6%; Shanghai Composite down 0.4%; CSI 300 down 0.2%
  • Taiwan’s Taiex index down 0.3%
  • South Korea’s Kospi index up 0.6%; Kospi 200 up 0.5%
  • Australia’s S&P/ASX 200 down 1%; New Zealand’s S&P/NZX 50 down 0.6%
  • India’s S&P BSE Sensex Index little changed; NSE Nifty 50 little changed
  • Singapore’s Straits Times Index down 0.9%; Malaysia’s KLCI down 0.4%; Philippine Stock Exchange Index down 1.9%; Jakarta Composite down 1.1%; Thailand’s SET little changed; Vietnam’s VN Index little changed
  • S&P 500 e-mini futures up 0.5% after index closed down 2.4% in last session

©2019 Bloomberg L.P.