Asia shares fall on dim trade outlook; Singapore market down 1.3%

[SHANGHAI] Singapore shares dropped on Friday as concerns over renewed US-China trade war friction and lower oil prices dented sentiment in Asia.

Singapore markets, which dropped as much as 1.6 per cent, marked their worst intraday session in a month. At 2pm, the Straits Times Index was down 1.3 per cent to 3,283.62.

"There could be some risk reduction in Singapore markets amid renewed geopolitical uncertainty," said Wei Liang Chang, an FX strategist, Mizuho Bank. "Furthermore, oil prices are dipping towards recent lows, and this could increase headwinds to the offshore marine sector and Singapore banks' loan portfolio."

Oil prices fell on Friday, hit by concerns that the trade dispute between the world's largest economies would stall economic growth and fuel demand. Singapore's top lender DBS Group Holdings lost as much as 2.6 per cent; Oversea-Chinese Banking Corp slipped as much as 3.25 per cent, while conglomerate Keppel Corp fell up to 2.5 per cent. However, the bourse was on track to finish higher for a fourth week in five.

Trade tensions deepened following Washington's threat on Thursday that it would impose fresh sanctions on Russia after it found that Moscow had used a nerve agent against a former Russian double agent and his daughter in Britain.

A drop in South Korean tech companies dragged Seoul's Kospi down one per cent, as the country's finance ministry highlighted high oil prices and US interest rate hikes as risks.

Worries over the tit-for-tat US-China trade conflict dragged on shares in China, with the Shanghai Composite index dipping 0.4 per cent. Hong Kong dropped 0.9 per cent.

But the tech-heavy ChiNext Composite index rose 0.6 per cent, extending Thursday's strong gains.

Josh Sheng, chief investment officer at Shanghai Tongshengtonghui Asset Management, said that reflected moves by Beijing to boost local firms, such as revamping a government leadership group to focus on supporting homegrown technology.

Elsewhere, Japan's Nikkei stock index fell 1.4 per cent even as data showed the country's economy expanded at a faster-than-expected annualised rate in the second quarter.

US President Donald Trump is pushing Tokyo to sign a free-trade agreement and has threatened to impose higher tariffs on auto imports including those from Japan.

Australian shares dipped 0.3 per cent after the nation's central bank left growth forecasts largely unchanged, but trimmed its near-term estimates for inflation.

Wall Street provided little direction for Asian markets, with the Dow Jones Industrial Average falling 0.29 per cent on Thursday, the S&P 500 ending 0.14 per cent lower and the Nasdaq Composite adding 0.04 per cent.

On Friday, S&P E-mini futures were down 0.1 per cent at 2,849.75 US Treasury yields also fell, with the yield on benchmark 10-year Treasury notes at 2.9276 per cent compared with 2.935 per cent at its US close.

Turmoil in some emerging currencies and the intensifying global trade tensions helped support the US dollar on Friday, keeping it near 13-month highs against a basket of its peers.

The dollar index, which measures the greenback's strength against a group of six major currencies, was up 0.08 per cent at 95.583, after gaining 0.5 per cent overnight. A rise above 95.652 would take the index to its highest since July 14, 2017.

The euro was flat at US$1.1528 and the dollar was 0.15 per cent lower at 110.90 yen.

The rouble retreated overnight to its lowest since November 2016 on threats of new US sanctions, weakening beyond the psychologically important 65-per-dollar threshold.

In commodities, US crude oil was flat at US$66.82 a barrel, while Brent crude was less than 0.1 per cent higher at US$72.11 per barrel.

Spot gold was largely steady at US$1,211.96 per ounce.

REUTERS