SYDNEY: U.S. stock futures fell and Asian shares slipped on Monday on growing uncertainty over whether the United States and China will be able to reach a deal to end their escalating trade war.
Japan's Nikkei average sunk as much as 1.0per cent to hit its lowest level since March 28. It last traded down 0.5per cent.U.S. benchmark 10-year Treasury note yield inched down to 2.441per cent, partly as a safe haven but also on speculation that the escalating trade war would put more pressure on global growth and thus keep major central banks accommodative.
White House economic adviser Larry Kudlow told a Fox News program that China needs to agree to"very strong" enforcement provisions for an eventual deal and said the sticking point was Beijing's reluctance to put into law changes that had been agreed upon. Kudlow said the U.S. tariffs would remain in place while negotiations continue."Talks are on-going, but our base case is for limited progress and Chinese retaliation.
The offshore Chinese yuan fell to its lowest levels in more than four months at 6.88 to the dollar. It last stood down 0.4per cent at 6.872 per dollar. "If there is a lack of progress over the coming weeks, Asian currencies will come under further pressure," noted Khoon Goh, head of Asia research at ANZ Research, while adding that his team does not expect the yuan will break the psychological 7 per dollar level.
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