Economy

Gold edges up on US-China tariffs; dollar caps upside

Gold edges up on US-China tariffs; dollar caps upside

A U.S. tariff of 15.0% on more than $125bn of Chinese goods kicked in on Sunday, with Beijing retaliating by raising tariffs on some USA goods. The contract fell $1.61 on Monday to close at $55.10. It was lifted by defense and infrastructure stocks. "The economic impact will surely show in Hong Kong data going forward and may temper the mood of equity traders in Asia as the new month begins".

Income-generating carry positions such as select emerging market currencies will perform well as central banks ease policy in response to weaker growth, Haefele added.

China, eager to quell the unrest before the 70th anniversary of the founding of the People's Republic of China on October 1, has accused foreign powers, particularly the United States and Britain, of fomenting the unrest.

The defense sector is expected to outperform the broader Shanghai Composite Index this month, according to analysts at China Galaxy Securities, an investment firm.

Among individual stocks, e-commerce company Rakuten (4755.TO) rose in Tokyo trading, while Mazda Motor (7261.TO) and SoftBank (9984.TO) fell.

However, the, released Monday morning, recorded an increase to 50.4 in August up from 49.9 in July. A separate survey by an industry group, the China Federation of Logistics & Purchasing, showed activity declining.

China's retaliation also took effect on Sunday, with higher tariffs being rolled out in stages on a total of about $75 billion of United States goods.

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However, both superpowers remain on course to return to the negotiating table later this month, leaving investors hesitant about how to proceed.

The outlook for global demand is still cloudy, Evans-Pritchard wrote in a research note.

"Any possible optimism regarding the trade talks (was) dashed by this ISM number, which showed a contraction in factory activity", said Tim Ghriskey, chief investment strategist at Inverness Counsel in NY. -Chinese tariff war and uncertainty over Australian consumer spending.

The Shanghai Composite Index gained 0.7% to 2,907.51 and Hong Kong's Hang Seng lost 0.7% to 25,546.70.

On Wall Street, the future for the benchmark Standard & Poor's 500 index was off 0.6% with trading due to resume after a three-day weekend. "Softer growth across Asia, particularly in China, was reported to have dented export opportunities".

USA manufacturing output shrank in August for the first time in 3-1/2 years, according to the Institute for Supply Management's Purchasing Managers Index (PMI), stoking fears that the global economic slowdown has reached American shores. But on Tuesday, the yuan's losses were limited by the People's Bank of China's fixing, which came in at 7.0884 per dollar, a new 11-1/2 year low but stronger than Reuters' estimate of 7.1099.