Asia markets mixed ahead of this week’s US-China trade talks

Asia markets were mixed on Monday as investors awaited a fresh round of U.S.-China trade negotiations expected to begin later this week.

Japan’s Nikkei 225 closed 0.16% lower at 21,375.25. Shares of index heavyweight Fast Retailing, the company behind the Uniqlo chain of apparel stores, slipped 0.74%. The Topix index finished its trading day largely flat at 1,572.75.

South Korea’s Kospi closed fractionally higher at 2,021.73, with shares of Hyundai Motor gaining 1.19%. In Australia, the S&P/ASX 200 advanced 0.71% to end its trading day at 6,563.60, as parts of the country were closed for the Labour Day holiday.

Overall, the MSCI Asia ex-Japan index rose 0.16%. Markets in Hong Kong and China were closed Monday for holidays.

Ahead of this week’s trade talks between the world’s two largest economies, there were reports that Chinese officials are growing hesitant to pursue a broad trade deal with the U.S.

Principal-level trade negotiations between the United States and China are set to begin on Thursday in Washington. Trade tensions have risen recently after reports said U.S. President Donald Trump’s administration is deliberating ways to limit American investors’ portfolio flows into China, which includes delisting Chinese companies from U.S. stock exchanges.

 

The outcome from this week’s trade discussions “will likely be pivotal in determining if the two sides can reach an interim trade deal that postpones further tariff escalation,” analysts at Eurasia Group wrote in a note last week. They said there is a 40% probability to an interim deal, and a 60% chance that Trump at least postpones further tariff hikes.

 

Tariffs on $250 billion worth of Chinese goods are scheduled to rise to 30% on Oct. 15. Both countries have slapped tariffs on billions of dollars worth of each other’s goods, which has roiled global markets, created uncertainty and dampened economic growth outlooks around the world.

 

“An interim deal at a minimum would include an agreement by Trump to delay further tariff increases and approve a subset of pending licenses for US suppliers to Huawei in exchange for China stepping up purchases of US agricultural products,” the Eurasia Group analysts added.

 

Still, Javelin Wealth Management CEO Stephen Davies told CNBC’s “Street Signs” on Monday: “I think people are getting a little bit shell-shocked by the fact that every time we seem to be getting close to one there’s something else that … causes discussions to be pulled back.”

 

“I think it’s now a question of waiting to see the detail and some actual movement rather than speculating on whether or not we’re gonna get it,” Davies said