Asia report: Most markets rise on weekend trade optimism

Most markets in Asia finished higher on Monday, as investors reacted to further developments on the US-China trade front over the weekend.

In Japan, the Nikkei 225 was up 0.49% at 23,416.76, as the yen weakened 0.06% against the dollar to last trade at JPY 108.8.

The major components of the benchmark index were higher across the board, with Fanuc up 0.1%, Uniqlo owner Fast Retailing ahead 0.58%, and SoftBank 1.64% firmer.

Internet content company Z Holdings - formerly Yahoo Japan - was up 1.2%, and communications platform Line was ahead 2.18%, after SoftBank confirmed last month that it was set to merge its major investment in Z Holdings with Line.

The broader Topix index was 0.24% higher by the end of trading in Tokyo, closing the day at 1,700.72.

On the mainland, the Shanghai Composite was 0.62% firmer at 2,909.20, and the technology-focussed Shenzhen Composite rose 0.72% to 1,617.19.

The People’s Bank of China made a rare move to its seven-day repurchase rate during the session, setting it at 2.5% - the first change to the repo rate in more than 18 months.

Analysts said the cut was a bid to lower the marginal cost of funding for banks in the country, which are heavily reliant on repurchases for liquidity.

South Korea’s Kospi slipped 0.07% to close at 2,160.69, while the Hang Seng Index in Hong Kong rose 1.35% to 26,681.09.

The positive movements in the special administrative region came even as the unrest continued to simmer, after a court ruled that the ban on face masks introduced by Hong Kong’s ruling council in October was “incompatible” with the city’s constitution.

It was a mixed day for the blue-chip technology stocks in Seoul, with Samsung Electronics down 0.37%, and chipmaker SK Hynix up 0.35%.

The US-China trade front was very much still at the top of the agenda, after China’s vice-premier Liu He spent some time on the phone with US Treasury secretary Steven Mnuchin and trade representative Robert Lighthizer on Saturday.

Reports suggested the two sides had “concrete discussions” about their main concerns over a first phase trade deal, with China state media claiming that the phone call was at the request of Washington.

Late last week, White House economic advisor Larry Kudlow stoked the rosy sentiment, claiming that the world’s two largest economies were “getting close” to an agreement.

Oanda analyst Craig Erlam said that although the news had led to renewed optimism, president Trump looked to have been somewhat premature in his assertion that a deal was done last month.

"This could well go on beyond the end of the year and even fall apart altogether which could be troublesome for the markets which have already invested so heavily into it.”

Oil prices were lower at the end of the Asian day, with Brent crude last down 0.81% at $62.79 per barrel, and West Texas Intermediate off 0.65% at $57.35.

In Australia, the S&P/ASX 200 lost 0.4% to end its trading day at 6,766.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.2% softer at 10,873.16.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.23% at AUD 1.47 and the Kiwi retreating 0.04% to NZD 1.5626.