Asia report: Markets subdued as trade deal speculation rumbles on

Trading was muted across Asia at the start of the week as Chinese and South Korean markets remained closed, though speculation continued over the next steps to be taken by the US and China in their ongoing trade talks.

Negotiators ended two days of talks in Washington last week without appearing to reach anything resembling a breakthrough, though President Trump remained confident enough to state that "I think when Xi and I meet, every point will be agreed to".

Julian Chillingworth, chief investment officer at Rathbones, told Bloomberg: "I think that in the very short term it looks highly likely from all the mood music we're getting from Donald Trump and the Chinese delegation that we will get a deal of sorts. That will probably be around March time and will be high profile."

However, Chillingworth added that issues surrounding intellectual property rights and theft were unlikely to be fully resolved by such a deal.

In Japan the Nikkei 225 was up 0.46% at 20,883.77 as rises of 5% for Nintendo and 4% for Hitachi were more than enough to offset an 8% drop suffered by Sony after the electronics giant slashed its full-year revenue outlook at the end of last week.

Meanwhile, the Japanese yen was down 0.3% against the US dollar at JPY109.87.

Markets are closed for the week in China and Taiwan due to Lunar New Year celebrations, while South Korean markets remained closed on Monday due to a national holiday.

Hong Kong's Hang Seng index, which was only open for a half-day and begins its own three day holiday tomorrow, climbed 0.21% to 27,990.21 as insurer AIA Group rose by almost 4% and China Resources Land dropped by nearly 2%.

The Australian S&P/ASX 200 increased by 0.48% to 5,891.20 as investors gambled that the Royal Commission's examination of misconduct in the banking, superannuation and financial services industry would recommend more lenient regulations than have previously been anticipated.

Consequently, each of the so-called 'big four', Westpac, Australia and New Zealand Banking Group, Commonwealth Bank of Australia and National Australia Bank, made gains and pushed the index higher.

On Tuesday, the Reserve Bank of Australia will deliver its monetary policy announcements, though it has been in pause mode for some time.

New Zealand's S&P/NZX 50 was the lone faller, dropping 0.22% to 8,979.41 as trading remained muted, with investors remaining more reserved than their Australian counterparts as the awaited on the outcome of the Royal Commission's report.

Air New Zealand was the session's biggest gainer, climbing 2% after having dropped to a three-month low last week following an annual earnings downgrade, while financial services provider AMP led the fallers as it dropped by over 3%.

Finally, the Australian dollar dropped by 0.3% against the greenback to AU$1.38, while New Zealand's dollar dropped 0.1% to NZ$1.45.