Asia report: Markets mixed as investors struggle for direction in trade war

Markets in Asia were mixed as investors sifted through a tsunami of geopolitical developments, amid concerns for Huawei’s consumer operations as its license for the official version of the Android operating system was revoked by Google.

In Japan, the Nikkei 225 was up 0.24% at 21,301.73, as the yen strengthened 0.25% against the yen to last trade at JPY 109.81.

Of the major components of the Tokyo benchmark, automation specialist Fanuc was down 1.43%, while fashion firm Fast Retailing added 0.62% and technology conglomerate SoftBank Group rose 0.39%.

Sentiment was relatively buoyant in the country, after fresh economic growth data showed better-than-expected improvements in the first quarter.

Japan’s economy was 2.1% larger in the first three months of the year, according to newly-released gross domestic product data, swinging in the opposite direction to market forecasts, which had picked a 0.2% contraction.

The broader Topix was also in the green, advancing 0.04% to 1,554.92 by the end of the day.

On the mainland, the Shanghai Composite lost 0.41% to close at 2,870.60, and the smaller, technology-heavy Shenzhen Composite was 0.75% weaker at 1,521.72.

Attention in China was very firmly on the privately-held Huawei Technologies towards the end of the session, after US technology giant Alphabet confirmed its Google division had revoked Huawei’s license to use the Android operating system.

US authorities added Huawei to the so-called ‘Entity List’ last week, restricting US companies from doing business with the Chinese telecoms behemoth.

Google confirmed that current users of Huawei devices would still be supported, but that future releases by Huawei would not feature Google Play Services or the Google Play Store - essential to the basic functioning of the official Android system.

Huawei surpassed Apple to become the second-largest smartphone manufacturer in the world late in 2018, and was set to release a slew of new devices in the coming months - including the mid-priced Honor 20 in London on Tuesday.

Its position in the global market was now in serious jeopardy, according to technology commentators.

Market analysts were still struggling to work out which way the Trump administration was going, however, with mixed signals emanating from headlines over the weekend.

“The latest headlines over the weekend indicate that Trump could be softening his stance slightly after he removed tariffs on Canadian steel and aluminium,” said London Capital Group head of research Jasper Lawler.

“However, US top tech companies starting to cut off vital Huawei supplies as they comply with the Trump administrations crackdown risks stoking tensions between the US and China further.”

South Korea’s Kospi was flat, losing just 0.09 points to finish its session at 2,055.71, while the Hang Seng Index in Hong Kong fell 0.57% to settle at 27,787.61.

The blue-chip technology stocks were in a mixed state on the Korean peninsula, with Samsung Electronics up 1.94%, while chipmaker SK Hynix fell 0.98%.

The Huawei debacle is likely to benefit Samsung, whose smartphones are the most popular in the world and the closest competitor to the Chinese manufacturer in the Android space.

Oil prices were higher as the region went to bed, with Brent crude last up 0.51% at $72.58 per barrel, and West Texas Intermediate adding 0.33% to $62.97.

In Australia, the S&P/ASX 200 surged ahead 1.74% to 6,476.10, after the country’s right-wing Liberal party staged a surprise outright majority in the federal election on Saturday.

Incumbent prime minister Scott Morrison was expected to yield his post to Labor leader Bill Shorten, but Australian electors defied pollsters and returned ‘ScoMo’ to the top job in Canberra.

That led to a 5.85% jump for the Sydney benchmark’s financials subindex, with the big four banks leading the charge.

Australia and New Zealand Banking Group added 7.78%, Commonwealth Bank of Australia was ahead 6.27%, National Australia Bank advanced 7.9%, and Westpac Banking Corporation leapt 9.21%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was also in the green, rising 0.5% to 10,234.15.

That was also led by the Australian election result, with Wellington-listed shares of the big banks leading the charge.

Australia and New Zealand Banking Group added 7.7%, and Westpac Banking Corporation was up 9.1% in New Zealand trading.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.68% at AUD 1.4462, and the Kiwi advancing 0.16% to NZD 1.5294.