SINGAPORE — Asian markets were lower on Tuesday after the U.S. Justice Department unsealed criminal charges against China’s Huawei, its subsidiaries and a top executive ahead of trade talks.
Keeping Score
Thailand’s SET traded at 1,622.24 on Tuesday morning, a loss of 0.17 percent. Japan’s Nikkei 225 index tumbled 1 percent to 20,448.47 and the Kospi in South Korea shed 0.4 percent to 2,169.42. Hong Kong’s Hang Seng index was 0.8 percent lower at 27,370.58. The Shanghai Composite index fell 1 percent to 2,572.39. Australia’s S&P ASX 200, reopening after a holiday, eased 0.6 percent to 5,870.80. Stocks fell in Taiwan and Singapore but rose in Indonesia.
Wall Street
U.S. stocks fell Monday on signs that slowing Chinese growth was affecting corporate America. Caterpillar, considered an economic bellwether, reported weaker-than-expected earnings for the fourth quarter of 2018. The company said it expects the growth of construction equipment sales in China to be flat this year. Chipmaker Nvidia slashed its fourth-quarter revenue estimate, citing slowing demand in China among other reasons. The S&P 500 index lost 0.8 percent to 2,643.85. The Dow Jones Industrial Average was down 0.8 percent at 24,528.22 and the Nasdaq composite gave up 1.1 percent to 7,085.68. The Russell 2000 index of smaller company stocks lost 0.6 percent to 1,473.54.
Huawei Charges
The U.S. criminal charges against Chinese tech giant Huawei allege that it violated U.S. sanctions by using a Hong Kong shell company to sell equipment in Iran. The company is also accused of stealing trade secrets, including technology behind a robotic device that T-Mobile used to test smartphones. Several of Huawei’s subsidiaries and its chief financial officer Meng Wanzhou were to also face criminal charges. Meng was arrested while changing flights in Canada last month. China has demanded her release and warned of retaliation against American and Canadian executives.
US-China Talks
According to Bloomberg, Treasury Secretary Steven Mnuchin said at a briefing Monday that President Donald Trump is set to meet Chinese Vice Premier Liu He in Washington. Negotiators from both countries are expected to sit down for two days of trade talks starting Wednesday. While a meeting with Trump may show that the U.S. is serious about striking a deal, charges against Huawei could cast a cloud over negotiations going forward.
Analyst’s Take
Charges against Huawei “illustrate the risks attached to the U.S.-China relationship,” DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary. “The actions by the DOJ show that it would not be enough for China to buy more U.S. goods. America wants China to make structural reforms especially on its intellectual property practices,” they added.
Energy
Benchmark U.S. crude added 20 cents to $52.19 per barrel in electronic trading on the New York Mercantile Exchange. It dropped $1.70 to settle at $51.99 per barrel on Monday. Brent crude, used to price international oils, rose 15 cents to $59.96 per barrel. It lost $1.78 to $59.81 per barrel in London.
Currencies
The dollar was trading at 109.12 yen down from 109.35 yen late Monday. The euro strengthened to $1.1430 from $1.1428.
