Australian stocks wilt under China trade onslaught

US markets were closed on Thursday for the Thanksgiving holiday, and market activity has been muted. US equity futures are almost unchanged today, providing little direction for Asia. Apart from China, the rest of the region appears content to lighten positioning, which has seen regional markets edge lower today.

One exception is Australia, where the news that China would start imposing tariffs on Australian wine exports tomorrow has delivered a jolt of reality to markets in the Lucky Country. Australia’s semi-olive leaf to China this week seems to have been swatted aside. China has ratcheted its trade war with Australia, with the announcement that China intends to start collecting anti-dumping deposits on Australian wine from tomorrow. There is no sign either that China will restart processing coal imports from the 50 ships worth of Australian coal anchored off the shores of China. Markets have, until now, completely ignored China’s silent trade war with Australia, which has seen basically every export sector except gas and iron ore penalised in some way or another. With a lack of other drivers today, that reality appears to be dawning on Australian equity markets. To a certain extent, this is Australia’s fault for allowing itself to become a one-trick pony export-wise to China. Australian equities there have retreated on the news. The ASX 200 and All Ordinaries falling 0.60%.

By contrast, the improvement in China Industrial Profits today seems to have shaken off the tech regulation, and India malaise that has weighed on mainland markets this week. The Shanghai Composite has risen 0.35%, with the CSI 300 climbing 0.60%.

Elsewhere in Asia, the Nikkei 225 has edged 0.15% lower, while Hong Kong, Singapore and Kuala Lumpur have also fallen 0.25%. Regional Asian markets are gently lower with the end of the week and a US holiday spurring investor to lighten risks into the weekend.