Asia: Stocks edge higher; oil steadies after slump

[TOKYO] Asian stocks posted modest gains after a bruising Wednesday sell-off, despite lingering concerns around the US and Chinese trade war that show little sign of abating. The dollar held an advance and crude oil steadied after its biggest plunge in two years.

Shares in Japan, China, South Korea and Australia all edged higher, paring some of yesterday's losses. Earlier, the S&P 500 dropped the most in two weeks as energy and material producers tumbled on angst that the Trump administration's trade stance will damp demand for commodities. Oil steadied after a slide that took West Texas crude toward US$70 a barrel, while 10-year Treasury yields ticked higher. The offshore yuan pared an overnight loss, though remained past a key level against the greenback that prompted verbal intervention from the central bank last week.

Traders continue to deal with the possibility of a further escalation in the dispute between the world's two largest economies and the impact that quarrel could have on global growth. Washington and Beijing now have about seven weeks to strike a deal or dig in for a trade war that could upend corporate supply chains and raise prices for consumers. High-level trade talks between the pair were said to have ground to a halt, just as investors were poised to turn their focus to corporate-earnings season and growth in the economy.

"Until you get resolution of the trade talks you're going to see international markets will underperform relative to the US," said Kevin Nicholson, chief market strategist at RiverFront Investment Group in Richmond, Virginia. The S&P 500 will probably trade between 2,600 and 2,800, with support from earnings growth and headwinds from trade tensions, he said. "Commodities are going to be a loser" in the trade war, and RiverFront has cut back its exposure, he said.

Elsewhere, Turkey's lira hit a record low as a local television channel said President Recep Tayyip Erdogan sees the exchange rate and interest rates falling amid uneasiness about his tightening grip over the central bank. The won fell, with little reaction to the Bank of Korea holding its benchmark rate at 1.5 per cent.

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