But that was followed by figures showing a slight pick-up in US manufacturing, easing concerns about a feared weakening of the world's top economy.
Asian markets crept up Tuesday but dealers remain on edge following contrasting economic data out of Europe and the US as investors await developments in the China-US trade standoff. After last week’s dovish shift by global central banks, dealers are in wait-and-see mode, with the key focus now on whether Washington and Beijing can find a solution to their long-running tariffs spat. Optimism over the issue took a jolt at the weekend when Donald Trump said he did not want to make a piecemeal deal — an option that had been floated — and instead was determined to sign a complete agreement.
He also said he saw no need to strike it before the November 2020 election. Top-level negotiations are due to start in Washington next month. Observers said there was some relief that a Chinese delegation’s visit to farms in rural US was cancelled at the request of Treasury officials. News of the cancellation last week hit New York stocks as dealers feared another breakdown in talks.
European markets ended with deep losses after figures indicating a sharp contraction in German factory activity last month, marking the worst in a decade for the region’s biggest economy.
But that was followed by figures showing a slight pick-up in US manufacturing, easing concerns about a feared weakening of the world’s top economy. There is a worry that the readings could tempt the Federal Reserve from pushing on with further interest rate cuts, though comments from a number of bank board members. Hong Kong gained 0.5 per cent after six days of losses and Shanghai rose 0.2 per cent, while Tokyo went into the break 0.2 per cent higher. Sydney and Seoul edged up slightly, while Singapore put on 0.3 per cent and Taipei was flat. Wellington and Manila dropped while Jakarta lost one per cent.
Forex traders will be keeping a close eye on London, where judges will rule on whether Prime Minister Boris Johnson’s decision to call an extended parliamentary recess was legal ahead of an October 31 Brexit date. With British and EU leaders still unable to break the deadlock there is growing concern that Britain will leave without a deal, despite a move by MPs to prevent such a scenario. “Expect fireworks on the British pound… with the UK Supreme Court due to release its ruling on the proroguing of Parliament,” said OANDA senior markets analysts Jeffrey Halley. The pound dipped against the dollar and euro in Asian trade.