Most major world stock benchmarks fell and the dollar’s rally ended on Monday, as investors fretted over the potential political and economic fallout from China’s capture of a US underwater glider.
European shares retreated in early trading. France’s CAC 40 lost 0.4 percent to 4,813.47, while Germany’s DAX slipped 0.1 percent to 11,391.50. Britain’s FTSE 100 dipped 0.3 percent to 6,991.78. US stocks were poised to open higher. Dow futures added 0.2 percent to 19,828.00, and broader S&P 500 futures edged up 0.1 percent to 2,257.90.
China’s seizure of a US Navy unmanned underwater glider is one of the most serious incidents between the American and Chinese militaries in years. China says it will return the device, but President-elect Donald J. Trump, who takes office in a month, tweeted China can keep it. The incident in the busy, disputed South China Sea is making investors nervous as markets enter a week of holiday-thinned trading. “It remains to be seen whether Mr. Trump will soften his tone when he moves to the White House,” said Piotr Mays, a strategist at
Rabobank.
“Based on his previous remarks it is reasonable to assume that the relationship between the US and China will be completely different under Trump’s presidency, which may have serious implications for the markets due to potentially significant changes in global trade policies and geopolitical risk.”
Investors are sitting tight as they watch for the outcome of the Bank of Japan’s final monetary-policy meeting of the year, which wraps up on Tuesday. Central bankers may revise their outlook for Asia’s second biggest economy based on recent data, including import and export figures released on Monday that showed a surplus for the third month in a row.
New government forecasts show a bigger Australian budget deficit than expected as growth in the resources-driven economy slows to 2 percent, more than previously forecast, as the China-powered mining boom falters. However, that means policy-makers are under no pressure to follow the Fed’s lead and tighten up on monetary policy, which could derail the stock market.
Japan’s benchmark Nikkei 225 index slipped 0.1 percent to end at 19,391.60, while South Korea’s Kospi edged 0.2 percent lower to 2,038.39. Hong Kong’s Hang Seng shed 0.9 percent to 21,832.68 and the Shanghai Composite index dipped 0.2 percent to 3,118.08. Australia’s S&P/ASX 200 rose 0.5 percent to 5,562.10. Benchmarks in Taiwan, Singapore, Indonesia, Thailand and the Philippines retreated.
The dollar eased to ¥117.49 from 117.91. The euro rose to $1.0465 from $1.0452. Crude oil rose 44 cents to $52.34 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1 to settle at $51.90 a barrel on Friday. Brent crude, the international standard, rose 25 cents to $55.46 a barrel in London.
US secrets stolen
A top US lawmaker said China may be poring over a seized underwater drone to unearth secret information about Navy technology, hours after President-elect Donald J. Trump suggested Beijing should “keep it.”
“The Chinese are able to do a thing called reverse-engineering, where they are able to— while they hold this drone, able to find out all of the technical information. And some of it is pretty valuable,” Sen. John McCain of Arizona said Sunday on CNN’s State of the Union.
The comments by McCain, who leads the Senate Armed Services Committee, underscored the US political tensions touched off by China’s decision to scoop up the submersible in international waters in the South China Sea. Assurances from China that the vessel would be returned failed to quiet US critics—including Trump, who initially denounced the snatch-and-grab move and then reversed himself hours later.
Trump said on Twitter on late Saturday “we should tell China that we don’t want the drone they stole back —let them keep it!”
Asked about the tweet, Jason Miller, communications director for the Trump transition, said on Fox News Channel that China was likely to return “a chunk of metal and maybe a bag of wires” after holding the drone for several days.
McCain said China’s seizure was “a gross violation of international law,” echoing the US response to the move and Trump’s initial blast via a tweet. The president-elect told his 17.5 million Twitter followers: “China steals United States Navy research drone in international waters—rips it out of water and takes it to China in unprecedented act.”
That broadside hit hours after the Chinese government said it had been in touch with the US military about the December 15 incident. The Pentagon said China will return the vehicle after “direct engagement” between Washington and Beijing.
‘Appropriate’ return
China’s ministry of defense pledged an “appropriate” return of the drone on its Weibo social media account, while also criticizing the US for hyping the incident into a diplomatic row. It
followed assurances from Beijing that the governments were working to resolve the spat.
AP, Bloomberg News
Image credits: AP/Andy Wong
1 comment
Copy-catter, cyber stealing now an actual thief caught in the act. Typical China.