Asia report: Markets mostly higher as investors focus on US-China trade

Markets in Asia were mostly higher on Friday, even as investors digested somewhat negative developments on the US-China trade front overnight.

In Japan, the Nikkei 225 was up 0.16% at 22,079.09, as the yen strengthened 0.05% against the dollar to last trade at JPY 107.97.

Of the major components on the benchmark index, automation specialist Fanuc was down 2.15%, while fashion firm Fast Retailing rose 0.8% and technology conglomerate SoftBank Group added 0.17%.

The broader Topix index was 0.04% higher at 1,616.23 by the close in Tokyo.

In fresh data out of the country, Japan’s core consumer inflation slowed to its lowest rate of growth in two years for August, standing at 0.5% year-on-year for the month.

On the mainland, the Shanghai Composite was 0.24% firmer at 3,006.45, and the smaller, technology-heavy Shenzhen Composite was ahead 0.16% at 1,675.35.

The People’s Bank of China took the wraps off its new loan prime rates during the day, with the one-year rate cut to 4.2% from 4.25% in August, and the five-year rate remaining stable at 4.85%.

South Korea’s Kospi was 0.54% higher at 2,091.52, while the Hang Seng Index in Hong Kong slipped 0.13% to settle at 26,435.67.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics rising 0.1%, while chipmaker SK Hynix slipped 0.6%.

Investors kept one eye on trade developments between the world’s two largest economies during the session, after a report from the South China Morning Post on Thursday suggested US presidential advisor Michael Pillsbury was ready to see the US escalate the trade war should a deal not be made shortly.

Chinese state-owned outlet Global Times saw its editor, Hu Xijin, tweet overnight that Beijing was “not as anxious to reach a deal as the US”, however.

Both countries are expected to hold high-level trade talks in the next few weeks, with both Washington and Beijing reportedly working towards ending their tariff tit-for-tat.

London Capital Group senior market analyst Ipek Ozkardeskaya suggested not all hope was lost, however, saying some progress was being made between the two nations.

“Recently, we have seen President Trump softening his stance against China, bringing the possibility of a temporary deal on the table.

“And given that the two countries are still far from achieving a full agreement, a provisional solution should give a significant relief to investors and send the US equities to fresh record highs.”

Ozkardeskaya noted that, especially with a “timid” Fed, investors were looking for “fundamentally good news” to regain confidence.

“There is only so much that a central bank could do. And President Trump now faces the fact that the Fed won't be as accommodative as he wished it would be.

“So, there is another way to send these stocks rallying into the 2020 election year - getting a deal done with China.”

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.6% at $64.79 per barrel, and West Texas Intermediate adding 0.8% to $58.66.

In Australia, the S&P/ASX 200 rose 0.2% to close its trading session at 6,730.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.3% higher at 10,829.39.

The down under dollars were a mixed picture against the greenback, with the Aussie last 0.02% stronger at AUD 1.4718, and the Kiwi weakening 0.39% to NZD 1.5930.