Asia shares the thrill as Beijing speaks hard

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SYDNEY (Reuters) – Asian stocks suffered a new wave of shocks on Friday, while harsh words about trade from the Chinese media drowned positive news about the US economy and corporate earnings.

FOTO FILE: people walk in front of a stock index board in Tokyo on April 22nd 2015. REUTERS / Thomas Peter / File Photo

Shanghai shares paved the way to red, amid growing repercussions from President Donald Trump's move to block China's Huawei technologies from acquiring vital American technology.

The sense of foreboding grew when the People's Daily of the Communist Party used a front-page commentary to evoke the patriotic spirit of past wars, saying that trade war would never reduce China.

"It is difficult to be too excited because the news flowing into the commercial front indicates an escalation rather than an ease in tensions," said Rodrigo Catril, senior FX strategist at National Australia Bank.

"Many commentators suggest that the decision on Huawei and other Chinese cameras actually means that the President took the nuclear option and has now moved towards a fully-fledged technological war with China."

Shanghai's blue chips fell 2.1%, while the offshore yuan exceeded $ 6.900 per dollar for the first time since November 2018.

MSCI's broader index of Asia-Pacific equities outside Japan has lost initial gains down 0.7%, leaving it at the lows of 15 weeks and down 2.6% for the week.

The Japanese Nikkei managed to rebound by 0.9%, while the main Australian index rose to a peak of 11 years due to the increase in commodity prices in favor of the miners.

But the E-Mini futures for the S & P 500 have vanished by 0.36% and the European ones have focused on initial losses.

The sentiment was briefly calmed during the night by the best US economic news, with surprisingly strong US housing starting and a welcome revival in the Philadelphia Federal Reserve production survey.

Walmart's positive results have tarnished the outlook for retail spending, although the giant chain has also warned that tariffs would increase prices for US consumers.

With the end of the earnings season, of the 457 S & P 500 companies that report around 75% have profit expectations, according to Refinitiv data.

The Dow closed Thursday with a gain of 0.84%, while the S&P 500 added 0.89% and the Nasdaq added 0.97%.

POUND GROUND DOWN

The colder tone in Asia helped the Treasuries recover their initial losses with the passing of the session, with the 10-year futures contract strengthening the 7 ticks.

The US dollar lost some of its splendor on the safe haven of the yen to settle at 109.64 from a high of 110.03. Against a basket of currencies, it was a softer shade at 96,824.

Yet the euro did not gain any ground and stood at $ 1,1173, down 0.5% for the week so far.

The pound was one of the worst performances of the British prime minister, Theresa May, who fought to keep her Brexit agreement, and her premiership, intact amid growing concerns about a disorderly departure from the European Union.

The pound hit a three-month low of $ 1.2783 and so far has fallen to a good 1.6% for the week.

The Australian dollar is also under pressure, with a 1.5% loss for the week at $ 0.6890 as investors bet on bets that interest rates would be cut in June.

The main engine in Asia was the Bitcoin cybernetic currency which lost more than 20% at one stage, with no visible reason. It was down 7%.

In commodity markets, spot gold stood at $ 1,287.34 per ounce due to the intensification of risk sentiment.

Oil futures stabilized in a fourth session while growing tensions in the Middle East fueled fears of potential supply disruptions.

US crude oil rose 14 cents to $ 63.01 a barrel, while Brent crude oil futures rose 12 cents to $ 72.74.

Edited by Kim Coghill and Shri Navaratnam

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