Asia report: Markets mostly higher as Trump and Xi agree ceasefire

Markets in Asia were mostly in the green on Monday, as investors digested the news that Donald Trump and Xi Jinping had agreed a fresh ceasefire in the ongoing trade war between the US and China.

In Japan, the Nikkei 225 leapt 2.13% to 21,729.97, as the yen weakened 0.36% against the dollar to last trade at JPY 108.24.

Of the major components on the benchmark index, automation specialist Fanuc was up 3.06%, fashion firm Fast Retailing added 0.94%, and technology conglomerate SoftBank Group rose 1.2%.

The broader Topix index also saw decent gains in Tokyo, rising 2.17% to finish up at 1,584.85.

On the mainland, the Shanghai Composite was 2.22% firmer at 3,044.90, and the smaller, technology-heavy Shenzhen Composite rocketed 3.46% to 1,616.55.

Investors appeared to be cheering the outcome of the G20 summit, and shrugging off fresh economic data out of China, which showed an unexpected contraction in manufacturing activity in June.

The unofficial Caixin/Markit purchasing managers’ index came in at 49.4 for the month, falling short of the 50 predicted by economists polled by Reuters.

A reading below 50 is indicative of contraction.

The Caixin reading reflected the official data released by Beijing on Sunday, which also came in at 49.4, compared to Reuters forecasts for 49.5.

South Korea’s Kospi was 0.04% weaker at 2,129.74, while the Hang Seng Index in Hong Kong remained closed for a holiday on the anniversary of the country’s return to Chinese rule.

Thousands of protestors took to the streets of the special administrative region, continuing their show of opposition to controversial extradition laws Beijing has been attempting to put in place in Hong Kong.

Seoul’s blue-chip technology stocks were a mixed bag, with Samsung Electronics falling 0.85%, while chipmaker SK Hynix rose 0.72%.

Sentiment began buoyant on Monday, after US president Donald Trump and his Chinese counterpart Xi Jinping confirmed that they would not be implementing any fresh tariffs on each other at the moment.

The pair met on the sidelines of the G20 meeting in Japan.

Analysts were not totally convinced by the new show of agreement from the pair, however, with many claiming it was unlikely to affect any business decisions in either economy.

Trump also suggested that the White House was partially lifting the ban on US companies doing business with Chinese telecoms equipment giant Huawei, although he did confirm that the ban would only be completely resolved at the end of negotiations.

“Trump and Xi gave investors what they wanted at the G20 meeting in Osaka this Saturday - hope,” said London Capital Group senior market analyst Ipek Ozkardeskaya.

“The two leaders agreed to resume the trade talks that have halted in May.

“A deal is not sealed just yet, but the two countries showed mutual willpower to end the deadlock and move on with the talks.”

Oil prices were higher as the region went to bed, with Brent crude last up 2.24% at $66.22 per barrel, and West Texas Intermediate ahead 2.26% at $59.82.

In Australia, the S&P/ASX 200 managed gains of 0.44% to end its trading day at 6,648.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was in the red, falling 0.3% to 10,464.53.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.34% at AUD 1.4291, and the Kiwi retreating 0.24% to NZD 1.4923.