Asia: Stocks slip, yen higher on Hong Kong bill concern

[SYDNEY] Asian stocks and US futures slid after US President Donald Trump signed a bill backing Hong Kong protesters, spurring another threat of retaliation from China, and raising concerns about the prospect for an interim trade deal.

The yen nudged higher and the yuan lower amid the increase in bilateral strains. Hong Kong shares were among the worst performers, though declines were still modest at the open. Japanese stocks were mostly flat. Earlier, the S&P 500 hit a fresh record high after US economic data beat analysts' expectations. The pound rose after a poll suggested the UK election could deliver a large majority for the Conservative Party.

With volumes light ahead of the Thanksgiving break, and little in the way of direct trade news, Mr Trump's signing of a bill increasing American scrutiny of Hong Kong was one of the few narratives for investors. A global benchmark of developing and emerging-market equities remains just below its all-time record, on course for a third month of gains.

"The bad news is, the trade war is still on," Andy Kapyrin, director of research at RegentAtlantic Capital LLC, told Bloomberg TV. "I really don't see substantial progress on trade with China," and markets will perceive Mr Trump's signing of the bill negatively, he said.

Elsewhere, a drop in Latin American currencies turned into a rout Wednesday as Chile's peso, Brazil's real and Colombia's peso all hit record lows.

Key events

The US celebrates Thanksgiving on Thursday, when equity and bond markets will be shut. Euro area inflation for October is due Friday, and the Bank of Korea sets policy on Friday.

Stocks

Japan's Topix index fell 0.1 per cent as of 10.37am in Tokyo.

South Korea's Kospi index dipped 0.2 per cent.

Hong Kong's Hang Seng lost 0.4 per cent, and Australia's S&P/ASX 200 Index climbed 0.4 per cent.

Futures on the S&P 500 fell 0.3 per cent. The underlying gauge rose 0.4 per cent on Wednesday.

Currencies

The yen rose 0.1 per cent to 109.39 per US dollar after slipping 0.5 per cent on Wednesday.

The offshore yuan fell 0.2 per cent at 7.0281 per US dollar.

The pound added 0.1 per cent to US$1.2930.

Bonds

The yield on 10-year Treasuries rose about three basis points to 1.77 per cent Wednesday.

Australia's 10-year yield fell two basis points to 1 per cent.

Commodities

West Texas Intermediate crude fell 0.4 per cent to US$57.89 a barrel.

Gold rose 0.2 per cent to US$1,457.31 an ounce.

BLOOMBERG