Asian stock prices retreated during Wednesday’s Asian session as investor confidence was further shaken by U.S. President Trump’s potential trade policies. The lack of details provided by the Trump administration since he took office has reduced investor confidence, as has his negative comments towards Japanese fiscal policy. MSCI’s broadest index of Asia-Pacific shares outside of Japan fell 0.3 percent on Wednesday, while Japan’s Nikkei 225 dipped 0.2 percent.
The dollar traded at 112.35 yen on Wednesday, up slightly from Tuesday, when it hit its lowest point since November. President Trump will be meeting Japanese Prime Minister Shinzo Abe on Friday, and anticipation of the meeting is expected to keep the pair trading thin volumes until the meeting.
The Chinese yuan fell slightly on Wednesday after reports on Tuesday showed that the country’s foreign exchange reserves dipped below the $3 trillion level in January for the first time in six years. Despite falling below expected levels, the decline was the lowest decline in seven months, a sign that China’s efforts to stem currency outflow may be working.
Trouble in Europe Set to Follow
Following the slump in Asian share prices, analysts are now looking towards Europe where political turmoil is spreading a shadow over the near-term outlook. Though European shares ended mostly higher on Tuesday, the euro declined 0.6 percent on Tuesday on concerns that a far-right victory in the French presidential vote would lead the country to withdraw from the common currency.
Greece’s bailout program is also troubling the market, with two-year Greek debt yield rising to near 10 percent on Tuesday, up from only 6 percent two weeks ago.
Earnings season in the U.S. kept the markets afloat on Tuesday with the Dow and Nasdaq hitting record highs and the S&P 500 closing near breakeven. The Dow briefly hit 100 points higher before closing with a gain of 40 points on the day. More than 65 percent of firms have reported better-than-expected data during earnings season, giving analysts hope that the Trump rally may continue in the coming months.