Asian Stocks Gain on Tariff Delay

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08/14/2019 | 08:14 am


By Paul J. Davies



-- German government bond yields hit record low



-- S&P 500 futures slip 0.3%



-- Japan's Nikkei up 1%



Asian stocks climbed on Wednesday after the White House abruptly changed course to delay tariffs on Chinese imports, but European indexes slipped as data showed the German economy shrank in the second quarter.



The Trump administration on Tuesday suspended its plans for new tariffs from September to December, sending U.S. indexes higher. Stocks in Asia followed suit, with shares in Shanghai up 0.4% and Japan's Nikkei up 1%.



Hong Kong's Hang Seng was an outlier in the region to trade nearly flat, as the city continued to struggle with protests and violence.



The declines in European stocks came after data showed German gross domestic product contracted by 0.1% in the second quarter due to further declines in exports.



The Stoxx Europe 600 was down 0.2%, while the German DAX dropped 0.3%.



The year-over-year German GDP growth of 0.4% in the quarter was better than expected, but the latest data mean that average quarterly growth has been zero since the third quarter of 2018, according to ING.



Government bond markets showed continuing signs of caution with the yield on the 10-year German bond falling to a fresh record low of minus 0.622%, according to Tradeweb. Bond yields and prices move in opposite directions.



The debilitating effect of trade tensions were also visible in Chinese data, as value-added industrial production in the country grew 4.8% in July, significantly lower than the 6.3% increase in June and below expectations of 5.9% growth.



Still, Asian stocks rallied on the tariff delay, which came amid concerns about the costs to American consumers during the holiday shopping season.



In commodities, gold prices edged down 0.3%, while Brent crude oil prices dropped 1%, pulling back from Tuesday's near 5% rally.



Write to Paul J. Davies at paul.davies@wsj.com





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