Asia report: US midterms and China-US relations subdue market rise

Most Asian markets crept upwards in Tuesday trading but gains were limited as investors exercised caution ahead of US midterm elections and attempts from Beijing to pursue trade talks with Washington.

Japan’s Nikkei 225 climbed 1.14% to 22,147.75, while the yen was up against the dollar by 0.05% at JPY113.13.

Healthcare and consumer goods manufacturers performed strongly, with Sumitomo Dainippon Pharma storming 7% by the close of trading.

SoftBank dropped by 2% after chief executive Masayoshi Son denounced the killing of Saudi journalist Jamal Khashoggi but said that the company’s investment fund would continue to do business with the Middle Eastern kingdom.

China’s Shanghai Composite dropped 0.23% to 2,659.36 and Shenzhen Composite was down 0.36% at 1,346.19 as investors remained cautious as China’s vice President Wang Qishan signaled Beijing’s readiness to engage in trade talks with Washington.

Stephen Innes, head of trading for APAC at OANDA, said: “Traders remain completely jaded knowing that the path to any trade agreement between the US and China will be fraught with peril.”

Bucking the trend, the country’s technology innovation sector performed well following rumours of tax breaks for the industry, with Zhangjiang Hi-tech Park and Luxin Venture Capital both rising by 10% by the close of trade.

Hong Kong’s Hang Seng index increased by 0.72% to 26,120.96 after Chinese Premier Li Keqiang said China will take targeted policy steps to support private companies and smaller businesses instead of resorting to strong monetary stimulus.

Supportive measures cited by Li include reducing taxes, fees and market trading costs.

Sino Biopharmaceutical was the top gainer following the news, rising by 3.5%, while offshore oil giant CNOOC followed close behind with a 3% jump.

South Korea’s Kospi jumped by 0.61% to 2,089.62 as the nation’s three largest shipbuilders, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries, all racked up strong gains following strong order volume from January to October.

However, the index was subdued by iPhone part suppliers Samsung Electro-Mechanics and LG Innotek, which both closed down more than 6% after reports suggested Apple cancelled a production boost for the new iPhone XR.

Brent Crude dropped 0.37% to $72.90, while WTI was down 0.32% at $62.90.

Australia’s S&P/ASX 200 increased by 0.98% to 5,875.18 as the land down-under’s energy and materials sectors gave a strong showing.

Nickel sulphide explorer and producer Western Areas, industrial minerals and technology company Syrah Resources and gold producer Saracen Mineral all made gains of more than 2.5%.

The Reserve Bank of Australia also met on Tuesday and voted to maintain interest rates at their record low of 1.50%, where it has sat since August 2016

New Zealand’s S&P/NZX 50 was up by 0.43% at 8,816.42 with A2 Milk leading the way with a 3.5% jump after dropping in recent sessions.

Other prominent risers included Synlait, which jumped 2.9%, Spark New Zealand, the shares of which rose 2.3%, and Kathmandu Holdings, which added 3.2% to its share price.

The Australian dollar was up 0.28% against the greenback at AU$1.38, while New Zealand’s dollar was up 0.23% at NZ$1.50.