Global Markets: Asian stocks trade cautiously on Trump's tilt towards China, Fed

Asian share markets got off to a cautious start on Wednesday as the White House took a tough line on a trade deal with China, just as investors were bracing for the latest batch of economic data from the Asian giant.

Early on Wednesday, MSCI`s broadest index of Asia-Pacific shares outside Japan was up a slim 0.1%, having climbed 1% the day before. Photo: Reuters

Asian share markets got off to a cautious start on Wednesday as the White House took a tough line on a trade deal with China, just as investors were bracing for the latest batch of economic data from the Asian giant. Figures on consumer and producer prices are expected to confirm inflation remains subdued and no bar to further stimulus. Shanghai markets had rallied on Tuesday on news Beijing would allow local governments to use cash from special bonds to fund investment projects.

Early on Wednesday, MSCI`s broadest index of Asia-Pacific shares outside Japan was up a slim 0.1%, having climbed 1% the day before.

Japan`s Nikkei dithered either side of flat, while Australian shares added 0.3%. E-Mini futures for the S&P 500 were little changed after a flat finish on Wall Street.

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President Donald Trump said on Tuesday he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five "major points" which he did not specify.

He also took aim at the Federal Reserve, saying interest rates were "way too high" and the central bank had "no clue".

Fed policymakers will meet on June 18-19 against the backdrop of rising trade tensions, slowing U.S. growth and a sharp step-down in hiring in May that have led markets to price in at least two rate cuts by the end of 2019.

Futures imply around an 80% chance of an easing as soon as July.

That might change depending on what U.S. consumer price data show later in the session. Headline inflation is seen slowing a touch to 1.9%, with core steady at 2.1%.

All the uncertainty around trade saw Wall Street break a six-day winning streak to end flat on Tuesday. The Dow eased a tiny 0.05%, while the S&P 500 lost 0.03% and the Nasdaq 0.01%.

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