Asia report: Markets mixed as trade optimism turns back to concern

Markets in Asia finished mixed on Tuesday, as the constant concern-optimism cycle on the US-China trade front began to swing back to concern once more.

In Japan, the Nikkei 225 was down 0.52% at 21,292.65, as the yen remained flat against the dollar, last trading at JPY 108.69.

It was a negative day for the major components of the benchmark index, with Fanuc down 1.49%, Uniqlo owner Fast Retailing off 1.39%, and technology giant SoftBank Group falling 1.34%.

The broader Topix index was 0.23% weaker in Tokyo, finishing the session at 1,696.73.

On the mainland, the Shanghai Composite was 0.85% stronger at 2,933.99, and the smaller, technology-heavy Shenzhen Composite gained 1.83% to 1,646.80.

South Korea’s Kospi was 0.34% weaker at 2,153.24, while the Hang Seng Index in Hong Kong gained 1.55% to close at 27,093.80.

Looking at Seoul’s blue-chip technology stocks, Samsung Electronics was flat, while chipmaker SK Hynix fell 0.23%.

Sentiment on the trade front was weaker during the Asian day, after reports overnight that Beijing was growing more pessimistic about reaching a deal with Washington.

According to CNBC, Chinese officials were concerned after US president Donald Trump claimed there would be no rollbacks to existing punitive tariffs - something they understood had been agreed.

Monday’s session had seen optimism take centre stage, after weekend reports from Chinese state media that “constructive” discussions had taken place between the economic superpowers.

Oanda analyst Craig Erlam said Trump's refusal to engage with Chinese wishes could simply be posturing, though time is running out if the two parties want any sort of agreement to be signed this year.

"Talks have collapsed before though and could again, the key difference this time though being that Trump will not want to go into an election without a deal.”

Oil prices were lower as traders in the region went to bed, with Brent crude last down 1.43% at $61.56 per barrel, and West Texas Intermediate falling 1.78% to $56.05.

In Australia, the S&P/ASX 200 added 0.7% to settle its trading day at 6,814.20, as investors digested the minutes from the Reserve Bank of Australia’s November meeting.

The central bank stood pat on the official cash rate at the meeting, at 0.75%.

“The board agreed that a case could be made to ease monetary policy at this meeting, but that the most appropriate approach would be to maintain the current stance of monetary policy and to make another full assessment once more evidence of the effects of the earlier monetary easing had become available,” the minutes read.

They also outlined how the Reserve Bank discussed the possibility that a further cut to interest rates could have a different effect on confidence than they have previously, when rates were cut from higher levels.

November was the third time the country’s central bank has reduced the official cash rate in 2019.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.2% stronger at 10,892.24, led higher by specialist dairy exporter A2 Milk, which surged 10.3%.

The company, which is heavily exposed to China, told shareholders that it was anticipating a wider operating margin than it had previously flagged, with higher prices, lower costs and a more favourable exchange rate helping to boost its bottom line.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.29% at AUD 1.4645, and the Kiwi advancing 0.39% to NZD 1.5567.