Asian markets mixed as US-China trade dispute affects sentiment

Asian markets were mixed on Wednesday as investors digested headlines related to a months-long trade dispute between the U.S. and China.

The Nikkei 225 advanced 0.88 percent, buoyed by extended softness in the yen. Steelmakers led gains early on, with JFE Holdings rising 10.06 percent. Exporters, including automakers, mostly tracked higher, as did bank shares.

Over in South Korea, the Kospi gained 0.37 percent. Tech was a mixed picture, with some Apple suppliers giving up early gains made after the iPhone maker beat earnings expectations. LG Innotek shed 1.84 percent after rising more than two percent.

Chinese shares slipped into negative territory as investors digested trade headlines and the release of a private survey of Chinese manufacturing activity, which met expectations. The Caixin/Markit Purchasing Manager’s Index came in at 50.8, down from 51.0 in June. The Shanghai Composite edged down by 0.32 percent and blue-chip CSI 300 index tracked lower by 0.4 percent.

Meanwhile, Hong Kong’s Hang Seng Index pared early gains to trade marginally lower, with Apple supplier Sunny Optical up 1.24 percent but steep losses seen in the real estate sector. Elsewhere, Australia’s S&P/ASX 200 added 0.07 percent.

MSCI’s index of shares in Asia Pacific excluding Japan advanced 0.08 percent in afternoon trade, with the slight advance following news that the U.S. and China are attempting to restart trade talks.

Representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are in private talks to resume negotiations on trade matters in a bid to avoid a trade war, Bloomberg News reported, citing two sources. Mnuchin had told CNBC last week that “quiet conversations” with Beijing continued to take place.

“Markets took some relief on news that trade talks between the U.S. and China could be back on the menu as the U.S. gears up to impose tariffs on another $16 billion of Chinese imports — a move that will likely be met with an equal-sized retaliatory measure by China,” ANZ Head of FX Research Daniel Been said in a morning note, adding that details were lacking.

Market sentiment was somewhat affected by separate, less upbeat news on the trade front, with Reuters citing a source that the Trump administration intends to propose a larger 25 percent tariff on $200 billion worth of Chinese goods. That would be greater than the 10 percent tariff the administration had mentioned earlier this month.

The latest developments in the trade dispute between the world’s two largest economies came after U.S. tariffs on $34 billion worth of Chinese goods took effect early in July, a move that was swiftly met with retaliation from Beijing.

The mixed session also came after Wall Street advanced on Tuesday, which was also the last trading day of the month. For July, U.S. stocks recorded their largest monthly gains since January amid robust corporate earnings and economic data.

Around 60 percent of S&P 500 companies having reported results, with 82 percent of those announcing expectation-topping earnings, according to Thomson Reuters I/B/E/S.

In currencies, the dollar broadly firmed ahead of the conclusion of the Federal Reserve’s policy meeting. The dollar index, which tracks the greenback against a basket of currencies, last traded at 94.645.

Against the yen, the dollar traded at 111.94 at 12:46 p.m. HK/SIN. The Japanese currency extended declines after softening overnight when the Bank of Japan kept policy steady and made some minor communication tweaks.

Ahead, the Reserve Bank of India is slated to makes its interest rate decision at 5:00 p.m. HK/SIN. Stateside, the Federal Open Market Committee will conclude its two-day meeting during U.S. hours and is expected to keep rates on hold.

Source: CNBC