Asia markets cautious after US and China conclude trade talks

Asia markets traded cautiously on Thursday morning as investors digest the conclusion of trade talks between American and Chinese officials in Beijing.

Japan’s Nikkei 225 and Topix index both slipped almost 0.9 percent in early trade. South Korea’s Kospi was fractionally lower as shares of steelmaker Posco fell almost 2 percent.

In Australia, the benchmark ASX 200 was largely flat, with most sectors advancing. The heavily-weighted financial subindex, however, slipped 0.1 percent as shares of Australia’s so-called Big Four banks were mixed. Australia and New Zealand Banking Group gained 0.24 percent and Westpac was fractionally higher. Commonwealth Bank of Australia, on the other hand, declined 0.27 percent while National Australia Bank was also lower by 0.16 percent.

The mainland Chinese markets, watched in relation to Beijing’s ongoing trade war with Washington, are set to open at 9:30 a.m. HK/SIN.

Investors will be watching out for the release of inflation data at the Chinese market open, when the country’s Consumer Price Index and Producer Price Index for the month of December are set to be released.

Symbol
Name
Price

 

Change
%Change

NIKKEI

HSI

ASX 200

SHANGHAI

KOSPI

CNBC 100

U.S. and China conclude three days of trade talks

The latest round of trade negotiations in Beijing concluded on Wednesday after an unscheduled third day of talks. Officials from Washington said in a statement that they will report back to the White House for further guidance on the talks.

In a statement, the office of the U.S. Trade Representative said that officials discussed “needed structural changes in China” on matters such as forced technology transfers, intellectual property protection and cyber theft. Talks also focused on “China’s pledge to purchase a substantial amount of agricultural, energy, manufactured goods, and other products and services from the United States,” the statement said.

The Chinese Commerce Ministry also issued its own statement on Thursday morning, saying that the just-concluded round of trade talks with the U.S. were extensive and established a foundation for the resolution of each others’ concerns. Both parties agreed to maintain close contact, the ministry said.

“Initial signs suggest that there is modest momentum building towards a narrow agreement in coming months, but that US trade hawks are fighting an intense rear-guard action to limit the scope of that agreement and keep the pressure up on Beijing,” analysts at Eurasia Group wrote in a note.

“If a deal is reached, it will almost certainly remain fragile and there will still be a long road ahead of the removal of US tariffs already imposed,” they said.

The world’s two largest economies have been engaged in a trade war since last year, slapping tariffs on billions of dollars worth of each other’s goods. This week’s meeting was closely watched by investors as they assess the impact of the trade spat on corporate profits.

Dow sees fourth straight day of gains

Overnight on Wall Street, the Dow Jones Industrial Average advanced 91.67 points to close at 23,879.12 — its fourth straight day of gains. The S&P 500 also saw a four day winning streak, rising 0.4 percent to finish its trading day at 2,584.96. The Nasdaq Composite gained 0.87 percent to close at 6,957.08.

Wednesday’s moves came after a summary of the Federal Reserve’s December meeting reiterated comments from the central bank’s chairman from last week about patience regarding monetary policy.

The minutes pointed to a backdrop of low inflation in the U.S., meaning the central bank can “afford to be patient about further policy firming.” They also indicated that some Fed officials think a “relatively limited amount” of rate hikes may be coming.

“Bottom line here is that neither the post-meeting statement nor Fed Chair Jay Powell’s post-meeting press conference adequately conveyed the essence of the committee’s discussions last month. Had they, the sharp post-meeting sell-off in US stocks could probably have been avoided,” Ray Attrill, head of foreign exchange strategy at National Australia Bank, said in a morning note.

The gains stateside, however, were pared after what appeared to be a poor meeting over the ongoing government shutdown in the U.S. between President Donald Trump and Democratic leadership. The president tweeted the meeting was “a total waste of time. ” Sen. Chuck Schumer said the president walked out of the meeting.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 95.219 after seeing an earlier high around 95.9 in the previous session.

The Japanese yen, widely viewed as a safe-haven currency, traded at 108.17 after seeing lows around 108.9 yesterday. The Australian dollar was at $0.7172 after gaining from the $0.714 handle in the previous session.

— Reuters and CNBC’s Fred Imbert contributed to this report.


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