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Oil Rises and Shares Drop in Asia Owing to Geopolitical Tensions

For most of the year so far, the capital markets in different parts of the world have been disrupted by uncertainty due to geopolitical tensions. The biggest geopolitical issue that has spooked the markets for the entire year so far has been the trade war between the United States and China. When the two biggest economies in the world are involved in a high stakes trade war, then the ripples are going to be felt in the rest of the world. The Asian markets have been affected for some time due to the dynamics of the trade war, and on Monday, most of the markets in Asia slipped. Analysts believe that investors, traders, and institutions are now seeking more clarity regarding the trade war before they can place their bets with confidence.

However, in addition to the trade war situation, there are other factors at play as well. The worsening relations between Iran and Saudi Arabia and the unrest in Hong Kong have also been cited as reasons for the weakness in the Asian markets. In addition to that, the fact that the Japanese markets are closed has also been cited as one of the reasons behind the overall weakness. However, it goes without saying that the continued worries about the signing of a new trade deal between the United States and China remain a major worry. An analyst at CMC Securities stated,

There are real concerns about the impact on economies from the trade dispute. People are probably getting an idea that this will be a long negotiation. And the longer it lingers, the more impact it will have economically.

Shares in the main Asian capital markets in Hong Kong and South Korea opened lower. However, the shares in the Australian and New Zealand markets managed to defy the trend. Shares in both markets were up by 0.3% on opening. During the weekend, the trade representatives from the United States stated that there have been productive talks with their Chinese counterparts. However, in this regard, it is important to point out that when the two sides had been engaged in discussion during the first half of the year, such comments had been made by delegates. Ultimately, nothing really came to fruition from those talks.

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Jodie Miller

Jodie Miller is experienced journalist. She holds double degree in journalism and communication. She joined our team as a content curator. She enjoys writing and curating contents related to finance and forex world.

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