Earlier in the day, August 16th, Asian stocks opened sharply lower, as it joined a global sell-off due to concerns regarding Turkey’s financial crisis however it managed to partially recover from the losses on the news that China and the US have arranged to have trade discussions.
As traders were concerned that Turkey’s currency crisis would lead to a global decline, it resulted in a weak Wall Street sessions. And as a result Equities all across the region also suffered huge losses at the opening bell, with Shangai and Tokyo off by more than one percent.
After Turkey’s currency crisis gave rise to another day of volatile trading, China’s leading Shanghai Composite was off by 1.17%, as Japan’s benchmark Nikkei 225 index shed 1.20% in early trade.
Additionally, in the most recent move in a ‘tit-for-tat’ spat between the two NATO allies, Ankara went on to announce hiked tariffs on imports of several US goods on Wednesday, August 15th.
This move by Ankara looked to be in retaliation for American sanctions.
Turkish currency has been affected by this crisis as it fell into a free-fall which gave rise to concerns that many European banks and emerging markets exposed to the unit might also be affected.
A bearish mood saw the broad US S&P 500 market going off by almost one percent, as the European markets closed by almost 2 percent.
Notably, the Turkish lira succeeded in gaining some momentum after losing just under a quarter of its value on Friday (August 10th) and Monday (August 13th), a loss that gave rise to a complete economic crisis in the critical emergent economy.
Also as reports revealed that China and the US would be having trade discussions, equities in Asia also showed bullish trends staging a fightback.
The ministry in Beijing made an announcement through a statement, saying that Wang Shouwen, China’s Vice Commerce Minister, and the deputy representative on international trade negotiations, would be meeting with a senior US Treasury official, David Malpass.
Several Traders believe that this announcement would make it possible for both nations to reach some sort of an agreement in the ongoing trade battle that has seen the two sides hit each other with reciprocal tariffs on goods worth $34 billion, and much more.
According to reports U.S.A and China plan on launching a new round of tariffs on $16 billion worth of goods from each country on August 23.
According to Makoto Sengoku, market analyst at Tokai Tokyo Research Institute, he said, “It is difficult to predict how the talks would progress, but it’s a positive signal that the two countries are aiming to come up with some compromise plan.”
He further told AFP, “If they did not want to come up with a solution, they would not agree to meet.”
In just a matter of hours into the trading session, the Nikkei reclaimed itself on the positive territory as markets in Hong Kong and China also erased nearly all of their losses.