Asian markets mixed as hope rises on U.S.-China trade, S&P 500 hits record high
Asian markets traded mixed Tuesday afternoon as investors monitor further developments on the U.S.-China trade front with the two economic powerhouses working toward a deal.
In Japan, the Nikkei 225 rose 0.4 percent while the Topix gained 0.8 percent. Shares of airliner ANA, however, fell more than 0.5 percent following a Nikkei report that the firm is expected to report a more than 20 percent drop in profit.
South Korea’s Kospi traded fractionally lower. The S&P/ASX 200 in Australia rose 0.11 percent.
The Hang Seng index in Hong Kong reversed earlier gains as it declined 0.4 percent, with Hong Kong-listed shares of HSBC dropping 1.58 percent after the lender reported third-quarter pre-tax profits that dropped 18 percent year-on-year.
Meanwhile, Hong Kong Chief Executive Carrie Lam said Tuesday she expects the city to book negative growth for 2019, Reuters reported, amid ongoing protests that have lasted for months.
Mainland Chinese stocks also fell by the afternoon. The Shanghai composite shed 0.4 percent and the Shenzhen component was fractionally lower. The Shenzhen composite also declined 0.294 percent.
Overall, the MSCI Asia ex-Japan index traded 0.1 percent higher.
US-China trade
Investors continue to watch for developments in U.S.-China trade. The Office of the U.S. Trade Representative said Monday that Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China. The USTR said last week that China and the U.S. are close to finalizing a phase one deal.
For his part, U.S. President Donald Trump said the deal with China is expected to be signed “ahead of schedule,” but did not elaborate on the timing, Reuters reported.
“The two sides have seemingly reached consensus in areas including standards used by agricultural regulators, but is probably worth noting that so far neither party has officially said anything about the contentious issue surrounding China’s demand for a pullback on US Tariffs,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a morning note.
“Given the ups and downs we’ve seen over the last year or more on this front, i think it’s very hard to say firmly: ‘Yes, this is the definitive deal. Yes, it’s the end of these issues,’” Hugh Young, head of Asia Pacific at Aberdeen Standard Investments, told CNBC’s “Squawk Box” on Tuesday.
“I don’t think it will be done and dusted and we won’t be speaking about it in a year’s time, I suspect we will still be speaking about it in a year’s time,” Young said, citing issues as the competition between the U.S. and China for supremacy in the 5G wireless technology space.
Overnight on Wall Street, the S&P 500 scaled a record high as investors stateside cheered strong earnings and optimism on U.S.-China trade. The S&P 500 added 0.6 percent to close at 3,039.42, above its previous record set on July 26.
The Dow Jones Industrial Average rose 132.66 points to end its trading day at 27,090.72 while the Nasdaq Composite gained 1 percent to close at 8,325.99.
Of the 206 S&P 500 companies that reported through Monday morning, 78 percent have topped analyst expectations, according to FactSet.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.783 after touching highs above 97.8 yesterday.
The Japanese yen traded at 108.97 against the dollar after weakening from levels below 108.9 in the previous session. The Australian dollar changed hands at $0.6845 after touching highs above $0.684 yesterday.
Oil prices shed earlier gains to slip in the afternoon of Asian trading hours, with international benchmark Brent crude futures 0.18 percent lower at $61.46 per barrel and U.S. crude futures declining 0.29 percent to $55.65 per barrel.
Source: CNBC
