BEIJING (AP) — Asian stocks were mostly lower Friday amid renewed jitters over North Korea and conflicting signals from President Donald Trump about U.S. trade policy.
KEEPING SCORE: The Shanghai Composite Index lost 0.3 percent to 3,143.81 and Tokyo’s Nikkei 225 retreated 0.2 percent to 19,210.49. Sydney’s S&P-ASX 200 shed 0.2 percent to 5,907.40 and Malaysia also declined. Seoul’s Kospi was unchanged at 2,209.48 while benchmarks in New Zealand, Taiwan and Singapore gained.
WALL STREET: U.S. stock indexes fluttered up and down, then ended the day a hair above where they started. Gains by Under Armour, Comcast and other companies reporting stronger-than-expected profits helped to offset a slump in energy stocks. A growing list of companies say they earned more in the first three months of 2017 than Wall Street had forecast. Analysts expect this to be the strongest quarter of growth in years. The Standard & Poor’s 500 index rose 0.1 percent to 2,388.77 and the Dow Jones industrial average added less than 0.1 percent to 20,981.33. The Nasdaq composite rose 0.4 percent, to a record 6,048.94.
NORTH KOREA: U.S. Secretary of State Rex Tillerson said China has threatened to impose sanctions on North Korea if it conducts further nuclear tests. The Trump administration has declared that all options are on the table to block North Korea from carrying out threats against the United States and its allies in the region. The administration is trying to pressure Pyongyang with assistance from China, its main trading partner and aid donor. Tillerson said on the Fox News Channel that China told the U.S. that it had informed North Korea “that if they did conduct further nuclear tests, China would be taking sanctions actions on their own.” The Trump administration said it wants to exert economic and diplomatic pressure to push North Korea to change course from developing nuclear weapons.
TRUMP AND TRADE: The Trump administration rattled companies and investors this week by leaking a possible plan to abandon the North American Free Trade Agreement with Canada and Mexico. Hours later, Trump backtracked and said he would try to overhaul the deal and would only pull out if he couldn’t secure favorable terms. Earlier this month, Trump reversed course on China and dropped a campaign promise to declare Beijing a currency manipulator. Nor has he followed up on vows to punish American companies that move jobs overseas or on threats to tax Chinese and Mexican imports.
STRONGER EUROPE: The European Central Bank kept its stimulus program and interest rates unchanged but said the economy of the 19-country eurozone is becoming stronger. There was little expectation the central bank would ease off its stimulus programs in the run-up to the second round of France’s presidential election, in which anti-euro candidate Marine Le Pen is battling pro-EU front-runner Emmanuel Macron. A survey by the European Union commission found economic sentiment in the eurozone near a ten-year high. “It’s true that growth is improving; things are going better,” said the European Central Bank president, Mario Draghi. He described the recovery as “solid and broad.”
ANALYST’S TAKE: Market sentiment is lagging hard data that show better European and Japanese economic growth, falling U.S. unemployment and rising Chinese exports, said DBS Group in a report. “What’s the bottom line to all this? Simple: the hard data isn’t going to look a lot better in 2017 than it did in 2016 anywhere in the world. But that’s because 2016 was already experiencing a very significant improvement that most simply refused to recognize.”
TRUMP AND TAXES: Trump’s proposal to cut corporate and capital gains taxes could draw money out of Asian stock markets and financial industries. A proposal to encourage U.S. companies to bring home profits could cause capital to “flee away from emerging markets,” said Margaret Yang of CMC Markets in a report. She said the attractiveness of Singapore and Hong Kong as wealth management centers would be “significantly diminished” by a U.S. capital gains tax cut, which would encourage Americans to move money home.
ENERGY: Benchmark U.S. crude jumped 46 cents to $49.43 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 65 cents on Thursday to close at $48.97. Brent crude, used to price international oils, surged 47 cents to $52.31 in London. It lost 59 cents the previous session to $51.82.
CURRENCY: The dollar declined to 111.15 yen from Thursday’s 111.26 yen. The euro retreated to $1.0868 from $1.0874.
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