Asian stocks inched up in subdued trade on Thursday after Wall Street ended higher, but political uncertainty in the United States and concerns about weakening global economic growth kept many investors on the sidelines.
Financials spreadbetters expect London’s FTSE, Frankfurt’s DAX, and Paris’s CAC to slip slightly when trade session open, with investors awaiting news from the European Central Bank’s first policy review of the year.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 percent, while Japan’s Nikkei average eased 0.1 percent.
“There is no new news to buy, and there are no fresh triggers to sell. Investors are staying on the sidelines,” said Yasuo Sakuma, who is chief investment officer at Libra Investments.
China’s benchmark Shanghai Composite and the blue-chip CSI 300 climbed 0.5 percent and 0.6 percent, respectively, taking positive cues from the financial firm’s profits and the approval for a new technology board in Shanghai. Hong Kong’s Hang Seng index increased 0.3 percent.
On Wednesday, Wall Street finished slightly higher after a host of upbeat earnings reports, including International Business Machines, but lingering concerns about trade tensions and the longest US government shutdown ever capped the rally.
White House economic adviser Kevin Hassett said in an interview that the US economy could see zero growth in the months if the partial government shutdown lasts for the whole quarter.
Japan’s manufacturing growth stalled in January as export orders fell at the quickest pace in two-and-a-half years, a preliminary business poll showed on Thursday, offering the most recent sign of slower growth hitting a major developed economy.
More companies cautioned of weakening demand in China, including South Korea’s SK Hynix Inc, which is the world’s second biggest memory chipmaker, and Hyundai Motor.
Analysts at Capital Economics warned that China’s economic slowdown looks set to be of a similar scale to that in 2015 to 2016, though there are some significant differences so far, most notably less downward pressure on the yuan and no signs of major capital outflows.
“Against a backdrop of various concerns about the economies, weakness in China adds to reasons to expect a marked global slowdown,” they wrote. “Since China makes up 19 percent of the world economy, the slowdown this year compared to last will knock 0.2 percentage points off global growth.”
US President Donald Trump said on Wednesday that the United States was doing well in trade talks with China, saying that China “very much wants to make a deal.”
However, sources familiar with the discussions said that the two sides are still apart of key structural elements crucial for a deal.
“Above all, (investors) are wary there’s a possibility that the economy slowdown will go on amid the uncertainty over the US-China trade tension,” said Harumi Taguchi, who is the principal economist at IHS Markit. “In such circumstances, the likelihood is becoming a little bigger that a situation remains where it’s hard to buy stocks and the yen is likely to strengthen.”
Elsewhere, the ECB is widely expected to stay on hold at a policy meeting that ends later in the day, but may address a sharp slowdown in growth, raising the prospect that any further policy normalization could be delayed.