Asia stocks mixed as investors digest US-China trade developments

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Shares in Asia traded mixed on Friday morning as investors digested recent developments on the U.S.-China trade front.

Mainland Chinese shares gained in early trade. The Shanghai composite added 0.32% and the Shenzhen component rose 0.43%. The Shenzhen component also advanced 0.467%. Hong Kong’s Hang Seng index, on the other hand, shed 0.26%.

In Japan, the Nikkei 225 gained 0.4% as shares of index heavyweight and conglomerate Softbank Group jumped 3.53%. The Topix index also rose 0.32%.

South Korea’s Kospi shed earlier gains as it declined fractionally, with shares of chipmaker falling more than 1%. Shares in Australia also reversed course as the S&P/ASX 200 slipped 0.19%.

Overall, the MSCI Asia ex-Japan index traded 0.17% lower.

U.S.-China trade sentiment got a boost on Thursday, as Gao Feng, a spokesperson for China’s Commerce Ministry, said both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster. The ministry spokesperson said both sides were closer to a so-called “phase one” trade agreement following constructive negotiations over the past two weeks.

A U.S. official also said both sides agreed to the tariffs rollback, according to Reuters. Still, the outlet also reported the plan faces fierce internal opposition in the White House.

“The elevation of discussion from a trade truce to a possible tariff rollback is important and suggests both China and the US have come under pressure to seal a deal,” Tapas Strickland, director of economics and markets at National Australia Bank, wrote in a note.

Those developments came ahead of the release of China’s October trade data, expected to be out around 11:00 a.m. HK/SIN on Friday.

Overnight on Wall Street, the Dow jumped 182.24 points to close at 27,674.80 while the S&P 500 rose 0.3% to finish its trading day stateside at 3,085.18. The Nasdaq Composite closed 0.3% higher at 8,434.52.

Movements in Treasurys will also be watched. The yield on the benchmark 10-year Treasury note saw its biggest upward move overnight since the day U.S. President Donald Trump was elected. Bond prices move inversely to prices.

Currencies and oil

The People’s Bank of China on Friday set its daily midpoint fix stronger than 7 yuan per dollar for the first since since early August. Every morning, the Chinese central bank sets a midpoint for the yuan on the mainland. Also known as the onshore yuan, the currency is allowed to trade within a narrow band of 2% above or below the day’s midpoint rate.

The currency has been watched in recent days after it strengthened past the 7 yuan per dollar mark earlier this week.”

The onshore yuan last traded at 6.9709 against the greenback, while its offshore counterpart was at 6.9714 per dollar.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.128 after rising from levels below 97.6 seen earlier in the week.

The Japanese yen, widely viewed as a safe-haven currency in times of market uncertainty, traded at 109.24 against the dollar after weakening from levels below 109 yesterday. The Australian dollar changed hands at $0.6882 after seeing an earlier high of $0.6906.

Oil prices slipped in the morning of Asian trading hours, with international benchmark Brent crude futures declining 0.29% to $62.11 per barrel. U.S. crude futures also shed 0.45% to $56.89 per barrel.

What’s on tap:

  • China: Trade data for October at 11 a.m. HK/SIN
  • Japan earnings: Honda Motor

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