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Stocks Fall on Dimming Hopes For U.S.-China Trade Talks

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11/21/2019 | 01:03am EDT

By Joanne Chiu

Stocks fell in Asia, following retreats in the U.S. and Europe, on concerns that trade negotiations between China and the U.S. could reach a stalemate.

Hong Kong's benchmark Hang Seng Index led Thursday's decline with a 1.6% drop, after the U.S. House of Representatives passed a bill in support of antigovernment protesters in the city. The Senate had passed the bill a day earlier, and it will now go to President Trump to sign. U.S. E-Mini S&P 500 futures dropped 0.2%, pointing to a weaker open in New York.

The declines came after the Dow Jones Industrial Average logged its biggest fall of the month. The U.S.-China trade talks appeared to have hit an impasse, with leaders of the world's two biggest economies still divided on core issues.

The passage of the Hong Kong bill could further complicate matters. The bill would require the U.S. secretary of state to certify annually that Hong Kong remained sufficiently independent from Beijing to warrant the special status that has helped the city grow into a global financial hub.

On Wednesday, Beijing summoned the highest-ranking U.S. diplomat in the capital to object to Washington's support for Hong Kong protesters.

Steven Leung, executive director of institutional sales at UOB Kay Hian, said Asian stock markets were pulling back because of the increased tensions between the U.S. and China. "Chances for the two countries to reach an accord before the end of this year are diminishing," he said.

Mr. Leung said some investors were trimming bets on equities after recent market gains, and noted that a Dec. 15 deadline for new tariffs was approaching.

Other trade-reliant markets declined. Japan's Nikkei fell 0.8% as the Japanese yen, typically considered a safe-haven currency, gained 0.2%. Korea's Kospi Index pulled back 1.6% while Taiwan's Taiex dropped nearly 1%, and China's Shanghai Composite retreated 0.4%.

All but one of the 50 stocks in the Hang Seng Index fell. WH Group, the world's largest pork producer and the owner of the U.S. meat processor Smithfield Foods, fell 4%. Smartphone-lens maker Sunny Optical dropped more than 3%.

Frank Benzimra, head of Asia equity strategy at Société Générale, said global stock markets had priced in the expectation for a "phase one" trade deal, with some trade-sensitive shares outperforming in recent months. That makes equities "vulnerable to any delay in passing the trade deal," he said.

Write to Joanne Chiu at joanne.chiu@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -1.69% 21052.53 Delayed Quote.-24.97%
HANG SENG -0.20% 23176.99 Real-time Quote.-17.78%
HUB CO., LTD. 0.00%End-of-day quote.0.00%
KOSPI COMPOSITE INDEX 0.12% 1727.27 Real-time Quote.-21.45%
NASDAQ 100 -1.41% 7528.113802 Delayed Quote.-10.53%
NASDAQ COMP. -1.53% 7373.08309 Delayed Quote.-14.18%
NIKKEI 225 0.01% 17820.19 Real-time Quote.-20.04%
S&P 500 -1.51% 2488.65 Delayed Quote.-22.97%
S&P/CITIC 300 INDEX -0.02% 3251.2 Delayed Quote.-8.46%
S&P/CITIC 50 INDEX -0.02% 3296.2 Delayed Quote.-11.80%
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