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Asia: Markets struggle as Comey, British vote approach

Tuesday, June 6, 2017 - 12:12

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Asian stocks struggled on Tuesday as investors wait nervously for key political events later in the week with the sacked former head of the FBI to give testimony to Congress and Britain holding a general election.

[HONG KONG] Asian stocks struggled on Tuesday as investors wait nervously for key political events later in the week with the sacked former head of the FBI to give testimony to Congress and Britain holding a general election.

After enjoying a healthy rally in recent weeks traders on most markets took their cash off the table ahead of Thursday's events.

The crises over Donald Trump's possible ties to Russia could come to the fore when James Comey appears on Capitol Hill, a month after the president fired him midway through a probe into the allegations.

The Russia question, and the country's possible interference in November's US elections, has hung over the tycoon's head since taking office leading calls for impeachment.

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There are concerns on trading floors that Mr Trump's economy-boosting agenda - big infrastructure spending, tax cuts and deregulation - could be thrown off the rails. Hopes for the policies helped drive a months-long global markets rally after his election.

Mr Comey's evidence comes as Britain votes in a snap election, with Prime Minister Theresa May's seemingly insurmountable lead slashed, fuelling fears the country could be thrown into fresh uncertainty and making talks on leaving the EU much harder.

"There is a strong sense of wanting to wait-and-see among investors ahead of former FBI director Comey's testimony and the UK elections," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

Tokyo ended the morning session 0.7 per cent down on a stronger yen and profit taking after hitting near two-year highs Friday.

Sydney shed one per cent and Shanghai was slightly lower while Singapore also slipped. Taiwan, Manila and Jakarta were all down.

But Hong Kong edged up 0.4 per cent.

On currency markets the dollar retreated on nervousness over Comey and following data showing growth in the key US services sector slowed last month.

And oil prices extended losses as dealers looked past a decision by Saudi Arabia, the United Arab Emirates and Egypt to severe ties with Qatar, citing its support for terrorism.

Analysts said they doubted whether the move would affect Opec production, although said Greg McKenna, chief market strategist at AxiTrader said it "has certainly increased geopolitical tensions in the region and could be a signal of the escalating tensions between the US and Iran as well".

Iran is an ally of Qatar while Mr Trump last month reiterated his support for Saudi Arabia.

AFP

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