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Nikkei Markets

Asian stocks fall as Trump comments trigger fresh uncertainty over trade talks

Chinese carmakers, banks biggest contributors to A300 loss

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan declined Wednesday after President Donald Trump's comments suggested that a trade deal between the U.S. and China is unlikely to materialize in the near future.

The Nikkei Asia300 Index fell 0.9% to close at 1,299.35. Chinese carmakers and lenders were among the biggest contributors to the losses on the gauge. Industrial and Commercial Bank of China led lenders lower with a 1.3% fall and Guangzhou Automobile Group declined 3.1%. An index of Chinese companies listed in Hong Kong dropped 1.3%. Chinese real estate companies China Vanke slipped 2.1% and China Overseas Land & Investment ended 2.5% lower. The politburo of the Communist Party of China said yesterday the country will not use real estate as a means to stimulate the economy in the short term.

Asian equities were pressured after Trump's comments on Twitter indicated that the ongoing trade war between the U.S. and China was likely to continue. Trump said that there were no signs that China was purchasing agricultural products from the U.S. Following the meeting between Trump and Chinese President Xi Jinping at the G20 summit last month, in which the two leaders agreed to a temporary truce, the U.S. President said that Beijing had agreed to buy U.S. farm products. The problem with Beijing was that "they just don't come through," Trump said, adding that the Asian nation "continues to rip off the USA."

Trump's comments came in the midst of ongoing talks between the U.S. and Chinese officials in Shanghai.

Jingyi Pan, a market strategist at IG Asia, said that while little had been expected out of the talks this week besides a discussion of the broad framework, Trump's unexpected lashing out at China, nevertheless, dented sentiment.

Meanwhile, investors are awaiting the highly anticipated Federal Reserve policy decision later in the day. The U.S. central bank is widely expected to deliver at least a 25-basis-points rate cut amid uncertain growth outlook and muted inflation. A few economists have predicted a 50-basis-points rate cut.

"We currently assign subjective probabilities of 90% to a 25-basis-points cut and 10% to a 50-basis-points cut," Goldman Sachs said in a note. "In the latter case, we would expect a relatively upbeat statement and press conference, indicating only a small chance of further cuts at subsequent meetings."

In other movers on the A300, LG Electronics declined 3.3% after the South Korean company reported a 15.5% year-on-year fall in June quarter net profit.

Amorepacific Group fell 1.4% after the South Korean cosmetic company's June quarter operating profit declined 40%.

Huaneng Power International advanced 1.6% after the Chinese electric power company reported a near-doubling of first-half profit.

Philippine electricity distribution firm Aboitiz Power dropped 2.2% after consolidated net income reportedly fell 2% on-year in the June quarter.

Hero MotoCorp jumped 4.3% after the Indian two-wheeler maker reported an unexpected year-on-year increase in June quarter net income.

Tenaga Nasional closed 1.5% higher. The Malaysian electricity company plans to transfer domestic power generation business and retail business into new wholly owned units under an internal reorganization.

Sime Darby ended 0.5% higher. The Malaysian conglomerate said it will appeal against a court's decision to pay 711 million ringgit ($173 million) to China-based firm CCCC Tianjin Dredging.

--Nimesh Vora

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