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Asia stocks plummet as Hong Kong turmoil and the crash of the Argentine peso unsettle investors



TOKYO (Reuters) – Asian shares eased on Tuesday as fears of a protracted Sino-US trade war, protests in Hong Kong and a crash in the Argentine peso currency drove investors to safe havens such as bonds, gold and the Japanese yen.

FILE PHOTO: Men walk past an electric screen displaying Japan's Nikkei stock average outside a broker in Tokyo, Japan, August 5, 2019. REUTERS / Issei Kato

MSCI's broadest index of Asia-Pacific equities slipped 1% outside Japan. Chinese equities fell 0.8%, while Hong Kong's main market index fell more than 1% to a seven-month low.

"The protests in Hong Kong are negative for stocks that are already in an adjustment phase, as it is said that the trade war will trigger a recession," said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co

Hong Kong's airport, the busiest cargo airport in the world, reopened on Tuesday, which could alleviate some concerns over the immediate economic impact of the protests over the past two months.

The protests began against a bill that allowed for deliveries to mainland China, but quickly became the biggest challenge to China's authority over the city since Hong Kong was returned by Britain in 1997.

The Japanese Nikkei has also been badly hit by a slump of 1.5% and on the way to its biggest daily decline in a week.

US. Equity futures were 0.13% higher in Asia, but that did not reassure the sentiment.

Singapore shares fell 1.1%, their lowest level since June 6, after the government cut its full-year economic growth forecasts. The city-state is often considered a pioneer of global growth because of its importance as a central trading hub.

The sale on regional markets took place on Monday, when Wall Street stocks struck and the S & P 500 lost 1.23%.

The mood was already weak, as more and more signs began to emerge that the US and China would not resolve their long-standing trade war quickly. The markets were hit by further turbulence after protesters on Monday managed to close Hong Kong airport.

The traders were also nervous after market-oriented Argentine President Mauricio Macri suffered a malady in the presidential primaries that increased the risk of a return to interventionist economic policy.

Benchmark yields on 10-year Treasury bills were almost at its lowest level in nearly three years, with gold trading close to its six-year high, and the yen hovering in a range suggestive of a seven-month high The dollar was evidenced by concerns in the financial markets, which were already plagued by global growth woes.

"Long-term interest rates will continue to fall and stocks will adjust lower, but this is only temporary. The big central banks cut interest rates, which will ultimately support the economy, "said Ishigane of Mitsubishi UFJ.

Analysts said trade could be dampened as many investors leave during the summer vacation. Nevertheless, there was no lack of gloomy news for investors who wanted to catch their breath after several months of market destruction.

The Argentine peso crashed overnight and fell to $ 55.85 after voters grabbed Macri by giving the opposition a surprisingly better-than-expected victory in Sunday's primaries.

The Merval Stock Index <.MERV > collapsed by 30%, losing between 18 and 20 cents on Argentina's 10-year benchmark bonds.

Refinutive data showed that Argentine stocks, bonds and the peso had not experienced such a simultaneous decline since the economic crisis and the South American country's debt default in 2001.

The gloomy backdrop was enough to push investors into safe havens, and US Treasury yields fell broadly on Monday as trade fears and political tensions bolstered assets in safe havens. [10659004] Asia's ten-year government bond yields tumbled to 1.6471% on Tuesday. Yields hit 1.5950% on Aug. 7, the lowest since October 3, 2016.

Spot gold rose 0.33% to $ 1,516.42 an ounce, close to its highest level in six years ,

The yen last hit $ 105.37 per dollar, batting 105.03, the strongest since the January 3 crash.

The Swiss franc, along with the yen as a safe haven in times of crisis, was trading at $ 0.9997 per dollar close to its highest level since the beginning of the year.

Oil prices declined slightly in Asian trading as expectations that large producers will continue to reduce their deliveries raised concerns about sluggish economic growth.

US. West Texas Intermediate Futures fell 0.33% to $ 54.75 a barrel.

(Source: Asian Stock Markets Link: tmsnrt.rs/2zpUAr4)

Editorial staff of Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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