Asian markets tepid as investors watch US-China trade developments
Asian markets were muted on Thursday afternoon as investors watched ongoing talks between U.S. and China, with the two economic powerhouses reportedly closer to striking a deal to end a protracted trade dispute.
Mainland Chinese shares ended the morning session higher, as the Shanghai composite added 0.56% and the Shenzhen component rose about 0.37%. The Shenzhen composite also gained 0.108%. Over in Hong Kong, however, the Hang Seng index declined 0.52%.
The Nikkei 225 in Japan rose 0.11%, while the Topix was largely flat.
Shares of Apple supplier Japan Display soared almost 6% following a Reuters report that the company would supply organic light-emitting diode (OLED) screens for the Apple Watch later this year.
The supply deal would mark Japan Display’s foray into the OLED display market, Reuters reported citing two sources familiar with the matter. The company currently supplies liquid crystal display screens for the iPhone XR.
In South Korea, the Kospi gained 0.17% as shares of industry heavyweight Samsung Electronics added more than 0.5%.
Australia’s ASX 200, declined 0.93% as the sectors slipped.
US-China trade hopes
High-level trade negotiations between China and the U.S. resumed on Wednesday in Washington. Hopes were high that both countries were closer to a deal, with U.S. President Donald Trump planning to meet with Chinese Vice Premier Liu He on Thursday in Washington.
White House economic advisor Larry Kudlow told reporters Wednesday that China has acknowledged for the first time that the United States has legitimate gripes about IP theft, forced technology transfer and cyber hacking.
“They have for the first time acknowledged that we have a point. Several points,” Kudlow told reporters at an event hosted by The Christian Science Monitor. Previously, he said, “they were in denial.”
“A lot of the news around the trade negotiations, I think … is priced in to the markets. I think markets are expecting a pretty comprehensive deal to come through, timing still uncertain,” Rob Subbaraman, head of emerging markets economics at Nomura, told CNBC’s “Street Signs” on Thursday.
“To really give the markets another lift, we need to see some of the existing tariffs, whether it’s on the $50 billion or the $200 billion, actually rolled back,” Subbaraman said.
“News that a US-China trade agreement is virtually a done deal has fuelled optimism,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a morning note. “But markets may be converging too quickly on the ‘done’ before the ‘deal.'”
Varathan said there remained “landmines” in the implementation and enforcement of any deal that might emerge, citing examples such as Washington’s demands that Beijing “gives up its right of retaliation” if the U.S. “unilaterally but proportionally imposes tariffs on China’s non-compliance.”
“A deal that needs to be done is not quite the same as a done deal,” he said.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.065 after seeing levels above 97.2 yesterday.
The Japanese yen traded at 111.38 against the dollar after seeing an earlier low of 111.51. The trade-sensitive Australian dollar was at $0.7115 after touching an earlier high of $0.7127.
Oil prices declined in the afternoon of Asian trading hours, as the international benchmark Brent crude futures contract was fractionally lower at $69.28 per barrel and U.S. crude futures declined 0.18% to $62.35 per barrel.
Source: Reuters
