Hong Kong leads Asia down as US bans China Telecom fan tension

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Hong Kong led most Asian markets down on Wednesday with tech companies in the sights after China Telecom’s US ban, adding to already high tensions between the superpowers as inflation concerns lingered. .

A strong corporate earnings season has provided much-needed support to investors in recent weeks as companies have shown resilience in the face of supply grunts, soaring commodity costs and wages, and rising cases of Covid.

But long-standing friction between Washington and Beijing continues to cast a shadow over trading floors, with both sides stuck in an impasse on a range of issues, including Taiwan, national security, technology, trade and Hong Kong. .

On Tuesday, the Federal Communications Commission canceled the license to operate the US unit of China Telecom, saying it “raises significant risks to national security and law enforcement.”

The move came after a crackdown by Donald Trump’s White House against other giants, including Huawei and China Mobile.

Chinese tech companies listed in the United States sank, and their Hong Kong stocks also suffered strong sell-offs, pushing the Hang Seng index down by more than one percent.

The Hang Seng Technology Index lost more than 3%, with Tencent, Alibaba, JD.com and XD Inc among those hit in the morning trading.

The move “appears to dampen previous hopes that US-China relations will improve,” said Jun Rong Yeap of IG Asia. It “raised doubts as to whether further escalation could bring back closer scrutiny from the United States on Chinese tech players.”

The rest of Asia was also in the red as a surge in Australian core inflation to exceed expectations added to general fears about soaring world prices that are forcing central banks to remove ultra-accommodative monetary policies. put in place at the start of the pandemic.

“Downside risks remain”

With some countries having already raised interest rates, the UK is expected to follow suit before the end of the year, while the US Federal Reserve will likely cut its bond buying program next month and increase costs loan in mid-2022.

Investors are hoping for clues to the European Central Bank’s plans at its last meeting on Thursday.

Tokyo, Shanghai, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta all fell, although Singapore rose.

The losses came as traders broke another record for the Dow and the S&P 500 on Wall Street.

However, observers remained optimistic that the global recovery, while slowing, will continue to boost business results.

“The downside risks to the economy persist, but investors are choosing to look beyond them as companies continue to give us plenty of reason to be optimistic about what lies ahead,” said Craig Erlam of OANDA.

Such “enthusiasm can come and go, creating a lot of interaction in the markets,” he added.

Still, Citigroup has warned that earnings growth could be near its peak.

Oil markets fell but remained at multi-year highs amid expectations of rising demand and supply concerns.

Investors are also keeping an eye on the crisis in the Chinese real estate sector, with a number of developers struggling to honor their debts, while industry giant China Evergrande faces a new deadline at the end of the week for avoid payment default.

Authorities have called on the boss of the company tycoon, Xu Jiayin, to dip into his own pocket to ease the company’s financial woes, according to reports.

However, with over $ 300 billion in liabilities and net worth under $ 8 billion, it’s unlikely to make a big difference.

Key figures around 02:30 GMT

Tokyo – Nikkei 225: LOWER 0.6% to 28,946.61 (pause)

Hong Kong – Hang Seng Index: DOWN 1.7% to 25,604.05

Shanghai – Composite: DOWN 1.1% to 3,558.91

Dollar / yen: LOWER to 114.08 from 114.14 yen at 2040 GMT

Pound / dollar: up $ 1.3770 from $ 1.3767

Euro / dollar: DOWN to $ 1.1599 from $ 1.1604

Euro / pound: DROP to 84.24 pence against 84.26 pence

West Texas Intermediate: DOWN 0.8% to $ 83.98 per barrel

North Sea Brent: DOWN 0.7% to $ 85.76 per barrel

New York – Dow: ON up less than 0.1% to 35,756.88 (close)

London – FTSE 100: Up 0.8% to 7,277.62 (close)

– Bloomberg News contributed to this story –

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