Asia markets were largely negative in Monday morning trade, with Canada and the U.S. failing to come to a trade agreement on Friday, and worries on further escalation in the U.S.-China trade war.
Japan’s Nikkei 225 traded in negative territory in the morning, down by 0.39 percent as most of its major sectors were lower. South Korea’s Kospi extended its losses to trade lower by 0.54 percent.
In Australia, the ASX 200 pared some of its earlier gains to trade largely flat.
The Greater China markets were down during early trade as Hong Kong’s Hang Seng index edged down by 0.68 percent. On the mainland, the Shanghai composite was lower by 0.39 percent and the Shenzhen composite tumbled by 0.795 percent.
After going past a U.S.-imposed deadline last Friday for Canada to join a trade deal that had been reached between the U.S. and Mexico, more talks between Ottawa and Washington are set to continue this week.
U.S. President Donald Trump notified Congress last Friday that he wants to sign a trade agreement with Mexico, and potentially Canada, in 90 days — the legal period required for a deal to be reviewed.
And if trade tensions with China worsen, that might weigh on emerging market currencies.
“With heightened US-China trade tensions running in the background (with the consult on another $200bn of tariffs on China) any relief that NAFTA might present this Wed (assuming Canada reaches an agreement) could prove to be fleeting,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
“And if Trump tightens the screws on China, (emerging markets) risks could flare up again, with EM Asia currencies perhaps bearing the brunt of the burn,” he added.
Despite the trade tensions, stocks saw their best August performance in years over on Wall Street.
The Dow Jones Industrial Average ended Friday down by 22 points, but was still up 2.1 percent for the month. The S&P 500 closed 0.01 percent higher that day and was up by 3 percent for the month. Both the Dow and S&P 500 recorded their best performances for the month of August since 2014. The Nasdaq Composite saw even greater gains, closing Friday 0.26 percent higher and ending the month over 5.7 percent up — its best performance for August since 2000.
The U.S. dollar index, which tracks the greenback against a basket of currencies, was at 95.186 as of 9:38 a.m. HK/SIN, after reaching a low of around 94.52 last week.
The Japanese yen was largely flat against the dollar at 111.96 yen while the Australian dollar was down at $0.7173 as of 9:39 a.m. HK/SIN.