Asia report: Markets lower as Washington sends mixed signals on China

Markets in Asia finished lower on Tuesday, as investors continued to hold their breath over strained US-China relations, while oil prices remained stable.

In Japan, the Nikkei 225 was down 0.21% at 22,818.02, as the yen weakened 0.41% to JPY 110.11.

Declines were seen in the real estate subindex, more than offsetting gains seen among financial plays, which featured a 1.71% surge from Mitsubishi UFJ.

On the mainland, the Shanghai Composite was ahead 0.58% at 3,192.58, and the smaller, technology-heavy Shenzhen Composite rose 0.91% to 1,839.88.

Fresh data out of Beijing on Tuesday was mixed, with industrial output beating forecasts, while retail sales missed expectations.

The periodic review of MSCI’s included stocks was also released, which saw 234 China A shares added to the list from 1 June.

South Korea’s Kospi was off 0.71% at 2,458.54, while the Hang Seng Index in Hong Kong slid 1.23% to 31,152.03.

Blue chip technology stock Samsung Electronics was off 1.8% in Seoul trading, while chipmaker SK Hynix fell 0.94%.

Losses were also prevalent among carmakers and steel producers on the Korean peninsula.

Keeping traders busy were the mixed signals coming out of Washington on the trade relationship between the US and China.

Commerce secretary Wilbur Ross said overnight that there remained a “wide” gap between the two countries, even as relations between the two presidents Donald Trump and Xi Jinping seemed positive.

That came after a tweet from Trump on Sunday suggested he was willing to make concessions to Beijing, saying that he wanted to find a way to get telecoms equipment and smartphone maker ZTE back into business.

ZTE suspended its operations after the US Department of Commerce banned American companies from supplying it with technology, after ZTE was found to have exported equipment to Iran against US sanctions.

Despite being based in China, ZTE still relies on chipsets and technology from US firms such as Qualcomm and Intel for its smartphones and network equipment.

“It's all still very much a work in progress,” noted National Australia Bank director of economics David de Garis.

Oil prices were higher as the region went to bed, with Brent crude last up 0.91% at $78.95 and West Texas Intermediate adding 0.76% to $71.50 per barrel.

In Australia, the S&P/ASX 200 fell 0.61% to 6,097.80, with all subindices declining, bar the information technology sector.

Telecommunications plays were led lower by former state telephone monopoly Telstra, which plunged 5.59% after issuing a profit warning on Monday.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped back from Monday’s record high, falling 0.05% to settle at 8,708.78.

Movements in Wellington were primarily influenced by the MSCI index review, with A2 Milk initially gaining after it was included, though it later fell back 1.5%.

Energy supplier Mercury fell 1.4% after it was dropped from the main MSCI index.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.5% at AUD 1.3354 and the Kiwi retreating 0.29% to NZD 1.4506.