Asia report: Markets rise on premature trade optimism

Markets in Asia were in the green on Monday, with sentiment on the up as investors digested the latest developments on the US-China trade front.

In Japan, markets were closed for the Health and Sports Day holiday, as the yen strengthened 0.03% against the dollar to last trade at JPY 108.26.

On the mainland, the Shanghai Composite was 1.15% higher at 3,007.88, and the smaller, technology-heavy Shenzhen Composite was 1.43% firmer at 1,660.33.

In fresh data out of China, imports and exports came in worse than expected for September, with exports down 3.2% year-on-year in dollar-denominated terms, and imports behind 8.5%.

The country’s total trade balance for the month was reported to be $39.65bn.

South Korea’s Kospi rose 1.11% to 2,067.40, while the Hang Seng Index in Hong Kong was up 0.81% at 26,521.85.

Both of the blue-chip technology stocks were higher in Seoul, with Samsung Electronics up 1.73% and SK Hynix rising 0.63%.

Samsung’s gains came after the firm issued third-quarter guidance last week, telling shareholders it was expecting profits to be slightly better than market expectations.

Optimism on US-China trade was boosted by comments from US Treasury Secretary Steven Mnuchin on Friday that the planned increase in tariffs on $250bn of Chinese imports, to 30% from 25%, would not go ahead on 15 October.

That itself came after US President Donald Trump said that the two economic superpowers had agreed to a “very substantial phase one deal”, which covered American concerns around financial services and intellectual property.

It also reportedly included the purchase of between $40bn and $50bn of US agricultural products by China.

However, it emerged after Asian markets closed that China was keen to hold further talks with the US before signing the deal.

Bloomberg cited people familiar with the matter as saying that China wants more talks with the US as soon as the end of October to hammer out the details of the deal before president Xi Jinping agrees to sign it.

“The deal itself was fairly underwhelming when announced late on Friday with an increase in agricultural purchases and the avoidance of a marginal increase in the rate of levies seen as the bare minimum expected from the markets,” said David Cheetham, chief market analyst at XTB.

“The failure to even get this agreed upon is worrying and seeing as this is 'phase one' of Trump’s self- proclaimed big deal, there are now serious doubts as to whether phases two and three will ever even get off the ground.”

Oil prices were weaker as the region went to bed, with Brent crude last down 1.92% at $59.37 per barrel, and West Texas Intermediate off 2.13% at $53.56.

In Australia, the S&P/ASX 200 managed gains of 0.54% to 6,642.60, with the hefty financials subindex ahead 0.65% as the country’s so-called ‘big four’ banks gained.

Australia and New Zealand Banking Group was 0.65% firmer, Commonwealth Bank of Australia added 0.38%, National Australia Bank was 0.57% higher, and Westpac Banking Corporation rose 0.52%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was ahead 0.3% at 10,923.71, with subscription broadcaster Sky - not related to its London-based namesake - recovering from its Friday slump, adding 1.1%.

That came amid rumours that Sky was close to securing a deal with New Zealand Rugby to keep its lucrative broadcasting rights until 2025, in a cash-and-equity deal with the sport’s governing body.

Its stock had weakened on Friday, after it emerged that the broadcaster had lost the rights to broadcast domestic cricket.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.52% at AUD 1.4801, and the Kiwi retreating 0.77% to NZD 1.5896.