Asia markets down as U.S., Canada Fail to Agree on NAFTA

Asia markets down as U.S., Canada Fail to Agree on NAFTA

Asian markets were largely negative in early morning trade as Canada and the United States failed to reach a trade deal on Friday and fears of further escalation in the US-China trade war.

Japan’s Nikkei 225 traded in a negative territory in the morning, down 0.51% as most of the major sectors fell. The Kospi index in South Korea expanded its losses to trade 0.56 percent lower.

In Australia, the ASX 200 index trimmed some of its early gains to trade heavily.

China’s major markets fell in early trade as the Hang Seng Index in Hong Kong dropped 0.68 percent. On the mainland, the Shanghai Composite Index fell heavily 0.98 percent and the Shenzhen Composite Index fell 1.15 percent.

After Friday’s US deadline for Canada to join a US-Mexico trade deal, talks between Ottawa and Washington are expected to continue this week.

US President Donald Trump told Congress last Friday that he wanted to sign a trade deal with Mexico, and Canada could, in 90 days, be the legal period for a review.

If trade tensions worsen with China, this could affect emerging market currencies.

“With increasing trade tensions between the United States and China in the background (with an additional $ 200 billion in tariffs on China), any NAFTA exemption on Wednesday (assuming Canada can reach an agreement) may be transitory,” Vishnu Varathan said.

“If Trump tightens the screws on China, risks may rise again, with Asian currencies likely to be hit.”

The Dow Jones finished down 22 points on Friday, but still up 2.1% this month. Both the Dow and the S & P 500 posted their best performance for the month of August since 2014. The Nasdaq composite index gained more, closing 0.26% on Friday. Ending the month up 5.7% – its best performance since August 2000.