Asian markets amid U.S.-China trade jitters

Asian markets rose on Friday as investors digested a series of developments overnight on the U.S.-China trade front that dampened hopes of a deal being reached between the two economic powerhouses.

Mainland Chinese stocks were higher on the day, with the Shanghai composite rising 0.24 percent to about 3,006.45 and Shenzhen component gaining 0.29 percent to 9,881.25. The Shenzhen component added 0.162 percent to approximately 1,675.35. Hong Kong’s Hang Seng index was 0.16 percent lower, as of its final hour of trading.

The People’s Bank of China published its new loan prime rates (LPR) on Friday. The 1-year loan prime rate was cut to 4.2 percent, as compared to 4.25 percent a month ago, while the 5-year loan prime rate was unchanged from the previous month at 4.85 percent.

The LPR is the interest rate that banks charge their most creditworthy customers and a revamp was announced by the Chinese central bank in August in a bid to lower borrowing costs to boost the country’s economy.

Elsewhere, the Nikkei 225 in Japan rose 0.16 percent on the day to 22,079.09 while the Topix index closed less than 0.1 percent higher at 1,616.23.

Japan’s core consumer inflation slowed to a new two-year low in August, rising 0.5 percent in August from a year earlier, and slowing from a 0.6 percent gain in July. It was the slowest pace of increase since July 2017, when the index rose 0.5 percent.

In South Korea, the Kospi advanced 0.54 percent to end its trading day at 2,091.52, while Australia’s S&P/ASX 200 closed 0.2 percent higher at 6,730.80.

Overall, the MSCI Asia ex-Japan index was up 0.48 percent.

US-China trade watch

Investors will watch for developments on the U.S.-China trade front following overnight developments. The South China Morning Post reported Thursday that known China hawk and Trump advisor Michael Pillsbury warned the U.S. is ready to escalate the trade war if a deal isn’t struck soon, citing an interview in Hong Kong.

Meanwhile, Hu Xijin — editor-in-chief of Chinese state media Global Times — tweeted overnight that China is “not as anxious to reach a deal as the US side thought.”

Those developments come as the U.S. and China are expected to hold high-level trade negotiations in the coming weeks, as they seek to reach a deal to end a tariff fight with both sides slapping duties on billions of dollars worth of each other’s goods.

“Even if we see a deal on tariffs, we think the tariffs probably will remain higher than where they were before 2017 and all of the other restrictions are going to remain in place as well,” Shaun Roache, chief economist of Asia Pacific at S&P Global Ratings, told CNBC’s “Squawk Box” on Friday.

“We’re talking here about investment restrictions on Chinese firms investing overseas and export controls in some areas of the technology sector,” Roache added. “They are as, if not more, important than the tariffs.”

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.172 after slipping from levels above 98.4 yesterday.

The Japanese yen traded at 107.80 against the dollar after strengthening from levels above 108.3 in the previous session. The Australian dollar was at $0.6804 after slipping from levels above $0.680 yesterday.

Oil prices rose in the afternoon of Asian trading hours, with U.S. crude futures gaining 0.84 percent to $58.62 per barrel and Brent crude futures adding 0.61 percent to $64.79 per barrel.

Source: CNBC