Asia report: Markets finish higher as sentiment remains buoyant

Most markets in Asia were higher as they closed on Tuesday, led by bourses in mainland China, as sentiment remained high following the news at the weekend that the US and China had reached a first phase trade deal.

In Japan, the Nikkei 225 was up 0.47% at 24,066.12, as the yen weakened 0.01% against the dollar to last trade at JPY 109.56.

It was a green finish for the major components on the benchmark index, with automation specialist Fanuc up 0.16%, Uniqlo owner Fast Retailing adding 0.97%, and technology conglomerate SoftBank Group advancing 1.53%.

The broader Topix index grew 0.59% by the time markets closed in Tokyo, finishing the trading day at 1,747.20.

On the mainland, the Shanghai Composite was 1.27% firmer at 3,022.42, and the technology-focussed Shenzhen Composite leapt 1.3% to close at 1,708.41.

South Korea’s Kospi advanced 1.27% to 2,195.68, while the Hang Seng Index in Hong Kong was ahead 1.22% at 27,843.71.

The blue-chip technology stocks were well into the green in Seoul, with Samsung Electronics up 3.66% and chipmaker SK Hynix soaring 4.74%.

Technology plays were also among the leading risers in Hong Kong, with web giant Tencent rising 3.17%, and Chinese photo editing app Meitu rocketing 6.99%.

Sentiment remained high through much of the Asian session, as traders continued to celebrate the reported first phase agreement between Beijing and Washington, which would see the US roll back a number of tariffs levied on Chinese goods.

In return, China had committed to purchase a certain quantity of agricultural goods from the United States.

That sentiment saw all three major indices on Wall Street finish at record levels overnight, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all closing at fresh highs.

Oanda analyst Craig Erlam said investors would be hoping that the final tweaking of details in the deal will take less time to sort out than the last changes, which took the best part of two months.

"As long as both sides continue to talk up the phase one agreement, then Santa may well deliver the end of December rally that every investor craves this time of year.

“We just have to hope that we're not getting overly excited about an exquisitely wrapped lump of coal," added Erlam.

Oil prices were higher as the region went to bed, with Brent crude last up 0.44% at $65.63 per barrel, and West Texas Intermediate rising 0.38% to $60.44.

In Australia, the S&P/ASX 200 was the odd one out in the region, slipping 0.04% to 6,847.30 by the end of play in Sydney.

Traders in the sunburnt country spent much of the day digesting minutes from the December meeting of Australia’s central bank, in which it said it was “prepared to ease monetary policy further” should economic conditions require.

“Members agreed that it would be important to reassess the economic outlook in February 2020, when the bank would prepare updated forecasts,” the minutes from the Reserve Bank of Australia read.

“As part of their deliberations, members noted that the Board had the ability to provide further stimulus to the economy, if required.”

The Reserve Bank stood pat on its official cash rate for the month, keeping it at 0.75%, as was widely expected by markets.

Australia’s banking sector was also in focus, as the Australian Prudential Regulation Authority launched an investigation into major player Westpac Banking Corporation for potential breaches of money laundering laws in the Banking Act.

It comes after the country’s anti-money laundering and terrorism financing watchdog, AUSTRAC, filed for court action against Westpac last month amid allegations that it had breached anti-money laundering laws on more than 23 million occasions.

Shares in Westpac finished down 0.85% in Sydney.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 0.3% to 11,260.84 on heavier-than-usual trading volumes, as investors played catch-up following Monday’s truncated session.

The exchange closed early on the previous day as it suffered a technical outage.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.54% at AUD 1.4604, and the Kiwi retreating 0.38% to NZD 1.5216.