Asian markets mostly dropped Friday on poor Chinese economic data and uncertainty surrounding the US-China trade talks.
That added to worries over rising political risks caused by an impeachment inquiry into President Donald Trump.
Hong Kong’s Hang Seng index lost 0.3%. China’s Shanghai Composite (SHCOMP) index swung between small gains and losses.
Profits at China’s industrial companies dropped 2% in August from a year ago, official statistics showed on Friday. It reversed a 2.6% gain in the previous month, indicating growing pressure on the corporate sector as the economy slows further.
“Economic weakness may continue to weigh on industrial profit growth going forward,” analysts at Citi wrote in a note on Friday.
On trade news, mixed messages have heightened uncertainty about the prospect of the US-China trade war.
The United States is unlikely to renew a waiver allowing American companies to do business with Chinese tech giant Huawei, Bloomberg cited a US government official as saying on Thursday.
But China’s foreign minister Wang Yi said on the same day Beijing is willing to buy more American products and take more “enthusiastic” measures to show goodwill ahead of trade talks, according to multiple reports.
“The market isn’t clear on what to make of the latest impeachment developments in the U.S., and this continues to increase uncertainty and could be weighing on investor sentiment,” wrote Stephen Innes, a market strategist for Asia Pacific at Axi Trader, in a report on Friday.
“However, the market does appear to be more concerned about US-China trade, and investors’ reaction… could significantly depend on what direction and intensity trade war winds blow,” he added.
US futures also dropped further on Friday, extending a lower close on Wall Street. The Dow futures dropped 0.2%, or nearly 40 points. The S&P and Nasdaq futures fell 0.1% and 0.3% respectively.
Top trade representatives from the US and China are expected to meet in early October to resume trade talks. Investors will be hoping the two countries can reach an interim deal to cool off trade tensions and potentially end their months-long trade war.
For the week ahead, investors will be keeping an eye on more economic data from China and the United States, a scheduled sales tax rise in Japan, as well as interest rate decisions from central banks in India and Australia.
Hong Kong markets will be closed on Tuesday for a holiday, while China markets will remain closed for most of next week.