Asian stocks slip on caution ahead of Trump-Xi meeting

Stock markets across Asia dropped on prospects of a lighter Fed balance sheet late this year. The caution ahead of the meeting between US president Trump and Chinese counterpart Xi also kept the bulls at bay.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%. Japan’s Nikkei index shed 248 points or 1.32%, tracking the overnight strength in the Japanese Yen despite the hawkish Fed minutes. South Korea’s Kospi dropped 11 points or 0.5% as well.

The sentiment soured after US house of Representative Speaker Paul Ryan said there was no consensus on tax reform and it would take longer to accomplish health care. Meanwhile, heightened odds of Fed dumping its bond holdings, leading to a sharper rise in the US rates also weighed over the markets.

The focus today is on the Trump-Xi meeting. It’s a give and take situation. Trump would want China to help US rein in North Korea, but in return China would want Trump to give soften his stance on international trade.