Headline indices of the Mainland China equity market declined for second straight session on Tuesday, 09 April 2019, as investors continued to book profit from markets on growing uncertainties on the Sino-U.S. trade front after a top White House official said the U.S. was not satisfied yet about all the issues standing in the way of a trade deal. Meanwhile, renewed conflict in key oil producer Libya and the threat of new tariffs on European goods from President Donald Trump also damped risk appetite. At closing bell, the benchmark Shanghai Composite Index was lower by 0.16%, or 5.15 points, to 3,239.66. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.72%, or 12.81 points, to 1,783.01. The blue-chip CSI300 index added 0.45%, or 18.20 points, to 4,075.53.
Investor sentiment was hampered following news that U.S. officials are not satisfied yet about all the issues standing in the way of a deal to end the U.S.-China trade war. However, a top White House official also stated that progress had been made in talks with China last week. Growing uncertainties on the Sino-U.S. trade front ahead of the Fed minutes release on Wednesday saw investors across the board adopt a cautious approach.
Meanwhile, risk sentiments turned downbeat on geopolitical tensions emanating from Libya and Iran. The recent news report that the US is proposing tariff hikes on the EU products and announcing a ban on 16 Saudi Arabians to arrive in the country adds volume into the geopolitical risk. The Trump administration moved toward imposing tariffs on about $11 billion in imports from the European Union, in response to the block's subsidies for aircraft maker Airbus.
Market participants are now awaiting minutes of the Federal Open Market Committee's March meeting, due on Wednesday, while the European Central Bank meeting on the same day is also on investors' radar. There is an expectation for a dovish-biased statement based on what came out in March. The larger issue is how concerned are our policy makers over the state of global economy. The US Federal Reserve last month abandoned projections for any interest rate hikes this year amid signs of an economic slowdown.
ECONOMIC NEWS: China's Central bank had posted a rise in the China's foreign reserves for fifth straight month in a row in March 2019. According to China's Central bank data, Chinese foreign reserve, the largest in the world, which once had saved global markets during the 2008-2009 recessions, had surged by nearly $9 billion in March to $3.099 trillion, remarking its highest level since last August.
Shanghai's consumers and investors are increasingly confident about the city's economy, buoyed by authorities' focus on development and cuts in taxes and fees. The Index of Consumer Confidence in Shanghai grew 4.8 points from the fourth quarter of 2018 to 124.5 points in the January-March period this year, according to the survey released yesterday by the Shanghai University of Finance and Economics. That was up 6.3 points from a year earlier.
CURRENCY NEWS: China's yuan was up changed against the U.S. dollar on Tuesday, as optimism over Sino-U.S. trade negotiations was offset by broad dollar strength following solid U.S. job data. Prior to market opening on Monday, the People's Bank of China (PBOC) set the midpoint rate at 6.7142, stronger by 59 basis points than the previous fix of 6.7201. In the spot market, onshore yuan was changing hands at 6.7145, firmer by 20 pips than the previous late session close. Onshore spot yuan traded in a tight range of less than 60 pips on Tuesday.