HONG KONG (AFP) - Asian stocks fell yesterday following losses on Wall Street as fresh doubts emerged over the prospects for US-China trade talks and global growth outlook.
Tokyo led the slump, while Hong Kong returned from the three-day Lunar New Year break also in the red as investors reacted to negative signals from the US ahead of crunch trade negotiations in Beijing.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are due to travel to China next week for a third round of talks.
But US President Donald Trump told reporters he did not expect to meet Chinese counterpart Xi Jinping before the March 1 deadline, when US duties on $200 billion in Chinese imports are due to jump sharply.
Analysts say Trump meeting with Xi in person ahead of the cut-off would make a meaningful deal more likely, but had flagged the difficulty of matching schedules with the US president flying to Vietnam to meet North Korea’s Kim Jong Un later this month.
Top White House economist Larry Kudlow further doused expectations by saying Washington and Beijing are a “sizeable distance” apart in talks.
The imposition of the tariffs could weaken the global economy after a brief rally at the start of 2019, economists say.
“Share markets have had a great rebound from oversold conditions in December and are now up against technical resistance and getting overbought,” Shane Oliver, head of investment strategy at AMP Capital, told Bloomberg.
“Meanwhile a bunch of balls remain up in the air regarding the trade war, the US shutdown and slowing global growth. So there is a high risk of a pull back from here.”
Tokyo closed down two percent, although Sony bucked the trend to soar more than four percent after announcing a plan for share buybacks worth up to 100 billion yen (US$910 million).
Hong Kong shed 0.2 percent after paring heavier early losses. Seoul lost 1.2 percent, Jakarta 0.4 percent and Manila 0.4 percent.
Shanghai and Taipei remain closed for the week.
The European Commission slashed its eurozone growth forecast for this year on an unexpected slowdown in Germany, tensions over lacklustre growth prospects in Italy, and French protests.
The commission, the EU’s executive arm, is now expecting growth of 1.3 percent in the eurozone this year, a significant cut from 1.9 percent predicted
The pound and euro slipped after EU President Donald Tusk warned there was “no breakthrough in sight” in Brexit talks, and the Bank of England also cut its UK growth forecast while keeping interest rates unchanged.
In early European trade, London and Paris both edged down 0.1 percent, while Frankfurt lost 0.3 percent.
Meanwhile, the Reserve Bank of Australia became the latest central bank to slash growth forecasts, citing the effects of a weaker housing market.
It said growth would reach 2.5 percent in the middle of this year, well down from the 3.25 percent it previously projected.