Asian Shares Fall After Report Overnight On China’s Views On US Treasurys

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Investing.com – Asian shares were weaker on Thursday in a follow-through from Wall Street but comments in the mid-Asian day that China is not looking to trim US Treasury purchases outside of normal market operations changed the tone.

225 fell 0.42% as a stronger yen weighed on exporters. Toyota fell 1.41%, Honda lost 1.93% and Canon shed 0.44%.

Australia’s dipped 0.58%.

In Greater China, the fell 0.15%, and the dipped 0.17%.

China’s foreign exchange regulator said on Thursday that a recent report on China considering slowing or halting purchases of U.S. Treasury bonds could be based on erroneous information.

Bloomberg News reported on Wednesday that Chinese officials reviewing the country’s vast foreign exchange holdings have recommended slowing or halting purchases of U.S. Treasury bonds amid a less attractive market for them and rising U.S.-China trade tensions.

China has been diversifying its forex reserves investments and its investments in US Treasurys is market-driven, the State Administration of Foreign Exchange (SAFE) said on its website. China’s forex reserves management departments are responsible investors, the SAFE added.

Overnight, Wall Street closed lower on Wednesday as concerns over China reducing its US Treasury purchases and the US exiting NAFTA offset strong gains in financials.

The closed lower at 25,369. The closed 0.11% lower, while the closed at 7153.57, down 0.14%.

Reuters reported Wednesday, citing two Canadian government officials, that Canada is convinced President Donald Trump will pull out of North American Free Trade Agreement (NAFTA).

That curbed a rebound in US stocks from session lows amid a surge in financials ahead of quarterly earnings reports from JPMorgan (NYSE:), Blackrock (NYSE:NYSE:) and Wells Fargo (NYSE:NYSE:) slated for Jan. 12.

US stocks had started the session on the back foot as traders mulled over a report suggesting that China was considering slowing or halting its purchases of US Treasurys.

Some said China’s move served as a warning to the U.S. administration that it could face higher borrowing costs should it start a trade war with Beijing ahead of the new US tariff measures expected in the coming weeks.

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