Asian stocks tepid amid hopes for progress in US-China trade talks

High-level trade talks between the U.S. and China are underway in Beijing. Asian stocks traded cautiously on Thursday afternoon as investors looked for progress in the months-long dispute.

There were reports that U.S. President Donald Trump may be considering whether to extend the deadline for a trade deal with China.

The mainland Chinese markets were mixed by the morning session’s end. The Shanghai composite slipped 0.32 percent while the Shenzhen component was slightly higher. The Shenzhen composite advanced 0.125 percent.

Hong Kong’s Hang Seng index fell 0.37 percent.

China trade numbers

The moves came despite Chinese trade data for January coming in stranger than expected.

Dollar-denominated exports for the month rose 9.1 percent from a year ago, according to Chinese customs data. January exports in the world’s second-largest economy were expected to have contracted 3.2 percent from a year earlier, according to economists in a Reuters poll, compared with December’s 4.4 percent decline.

January dollar-denominated imports fell 1.5 percent on-year, which was far better than expected. Imports in December fell 7.6 percent from a year ago.

“The variable timing of the Lunar New Year likely helped lift export growth, rather than reflecting any significant change in global demand. Looking at the regional picture, growth in South Korean exports fell over the same period, while Taiwan’s exports likely contracted as well based on its January PMI readings,” Nick Marro, analyst at The Economist Intelligence Unit, said in a note following the release of the Chinese trade data.

“This suggests that demand headwinds, both in the global consumer electronics industry and more generally, are continuing to bite into growth – meaning that downwards pressure on growth in Chinese shipments will likely return sooner rather than later, regardless of what happens with the trade negotiations this week,” Marro said.

Japan GDP

Elsewhere in Asia, Japan’s Nikkei 225 Topix both rose slightly in afternoon trade. Shares of Fast Retailing, the company behind the Uniqlo chain of apparel stores, recovered from earlier losses to gain about 1 percent.

That came after government data showed Japan’s gross domestic product grew at an annualized rate of 1.4 percent in the October to December period last year.

The preliminary reading for fourth quarter gross domestic product was in line with expectations from economists polled by Reuters. It came on the back of a downward revision to 2.6 percent annualized contraction in the third quarter.

Australia’s ASX 200 shed its earlier gains to trade nearly flat in afternoon trade as the heavily-weighted financial subindex slipped 0.82 percent. Shares of the country’s so-called Big Four banks traded down: Australia and New Zealand Banking Group slipped 0.49 percent, National Australia Bank shed 0.66 percent, Westpac fell 0.68 percent while Commonwealth Bank of Australia declined 0.8 percent.

South Korea’s Kospi fell by about 0.2 percent.

Trade talks

Overnight, U.S. stocks rose on hopes of a possible U.S.-China trade deal.

The South China Morning Post reported Wednesday that China’s Xi will meet with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer on Friday.

The report, which cites sources close to the matter, said Xi “is scheduled to meet” with key members of the U.S. trade delegation that’s in Beijing, including Lighthizer and Mnuchin. Chinese Vice Premier Liu He is also expected to attend a banquet for the U.S. delegation this week, according to the newspaper.

“There is reason to believe that the two sides are engaged in very serious discussion and hopefully, by the end of that … there will be a kind of deal,” Victor Gao, vice president at Center for China and Globalization, told CNBC’s “Squawk Box” Thursday.

“This will avert further aggravation of tensions between China and the United States and, hopefully, it will help (in) putting the trade war behind us,” Gao said.

China and the U.S. are trying to strike a deal before March 2. Otherwise, additional U.S. tariffs on Chinese goods could take effect. The two economic powerhouses have been locked in an ongoing trade fight that has rocked global financial markets since 2018.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.075 after seeing an earlier high of 97.176.

The Japanese yen traded at 111.02 against the dollar after weakening from levels below 110.5 in the previous session. The Australian dollar was at $7.115 after seeing highs around $0.713 yesterday.

Oil prices rose in the afternoon of Asian trade. The international benchmark Brent crude futures rose 0.58 percent to $63.98 per barrel. The U.S. crude futures contracts also gained 0.5 percent to $54.17 per barrel.

Source: CNBC