New York - Asian markets retreated on Friday at the
end of a broadly positive week, with traders turning their attention to a Group
of Seven summit that could see world leaders clash with Donald Trump over his
latest tariff provocations.
While there remain concerns about a possible trade
war and other geopolitical issues, equities have enjoyed a positive run since
last Friday's strong US jobs report that fuelled optimism in the global
outlook.
The euro has also held on to its latest gains on
expectations the European Central Bank will soon start winding down its
crisis-era stimulus, while oil added to Thursday's rally as Venezuela struggles
to produce and export.
Japan's Nikkei ended the morning session 0.1% down,
while Hong Kong lost 1% after a six-day run.
Shanghai slipped 0.9% ahead of key Chinese trade
data, Sydney lost 0.1%, Singapore was down 0.5% and Seoul dropped 0.7%.
Taipei, Manila and Jakarta were also down.
As leaders arrive in Quebec for the G7 meeting,
there is talk that Trump could expect some harsh words after he imposed tariffs
on steel and aluminium from Canada, Mexico and the European Union.
The move has led to retaliatory measures and
sparked fears of a global trade war.
Tense talks
"Usually (the G7 summit is) a non-event for
markets but with all the focus on escalating trade tensions amongst
long-standing allies, there's a good reason for investors to be chary as this
meeting is unlikely to follow an orderly arrangement of discussion," said
Stephen Innes, head of Asia-Pacific trade at OANDA.
"Even more so as Canada and Mexico have retaliated
against a range of US exports and the EU has promised to do so as well."
Canadian Prime Minister Justin Trudeau and German
Chancellor Angela Merkel have said they expect tense discussions, while
France's Emmanuel Macron said governments should not be shy about making deals
without Washington.
The White House's stance on environmental issues is
also expected to be on the agenda.
However, there is hope over China-US trade talks
after they reached a deal allowing Chinese telecoms equipment maker ZTE to pay
a $1.4 billion fine instead of being hit by a seven-year ban on selling to US
firms.
Oil prices were marginally higher a day after
jumping at least 2% on a report that major producer Venezuela was struggling to
ship its commodity.
Also providing support were signs of cracks in oil
cartel OPEC, with some members not as keen As kingpin Saudi Arabia to end an
output cap that has been in place with Russia for two years.
"While oil prices may have seen their
near-term peaks, it's highly unlikely prices will collapse but rather OPEC,
through gradual supply increases, will guide prices low enough so US consumers
will not feel the pinch, yet remain high enough to benefit the industry going
forward," Innes added.
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