Tuesday Morning Briefing: Trump’s Protectionism Has Asia On The Edge

Asian stocks opened on a tentative note after Donald Trump pulled the U.S. out of the Trans-Pacific Partnership trade accord. U.S. stocks fell, while Japanese shares opened lower after the yen hit a two-month high against the dollar.

The greenback dropped to a six-week low after Treasury Secretary nominee Steven Mnuchin said an ‘excessively strong' dollar could hurt the country's economy.

Oil climbed to $53 per barrel while gold remained stable after scaling a two-month high.

Trump Pulls U.S. Out Of TPP

Within days of assuming office, U.S. President Trump signed an executive order to withdraw from the Trans-Pacific Partnership with 11 other nations. It is unclear whether Trump will replace the TPP with other trade deals.

Uncertainty over Trump's future course of action spooked U.S. equity markets. The Dow Jones Industrial Average closed in the negative for the sixth time in seven sessions. The S&P 500 Index shed 0.2 percent, while the NASDAQ Composite Index closed largely unchanged.

Dollar At Six-Week Low

The U.S. dollar slumped to a six week low on U.S. Treasury Secretary nominee's comments on the strength of the currency.

"From time to time, an excessively strong dollar may have negative short-term implications on the economy," Mnuchin said in response to a question from a senator on implications of a hypothetical 25 percent rise in the greenback.

The Bloomberg Dollar Spot Index, which has rallied since Trump's election on November 8, fell another 0.2 percent, adding to its 0.7 percent fall on Monday. The gauge has fallen for four straight weeks, the longest retreat since February.

Also Read: Mnuchin Says Excessively Strong Dollar May Hurt U.S. Economy

Oil Halts Decline

Oil halted its decline after Iraq said that it was close to implementing its share of pledged output curbs.

The second largest producer among Organization of Petroleum Exporting Countries (OPEC) has reduced supply by 180,000 barrels per day and will cut a further 30,000 barrels per day by the end of this month, according to Iraqi oil minister Jabbar Al-Luaibi.

U.S. crude inventories probably expanded by 2.25 million barrels last week, according to the median estimate in a Bloomberg survey.

West Texas Intermediate crude hovered around the $53 mark after falling 0.9 percent on Monday.

Steady Start?

The SGX Nifty Index rose 0.16 percent to 8,427 as of 7:05 a.m., indicating a steady start for Indian equities.

Shares of Hindustan Unilever Ltd. and Bharti Infratel Ltd. will be in focus after they posted their third quarter numbers after market hours on Monday. While HUL saw a profit growth of 7 percent, its volumes dropped 4 percent. Meanwhile, Bharti Infratel missed analysts' estimates.

HDFC Bank Ltd. and Bharti Airtel Ltd. are some of the major companies that are set to post their quarterly earnings today.

Also Read: Hindustan Unilever Says Demonetisation Impact Is Starting To Fade