Asia report: China stocks fall amid ongoing trade concerns

In Japan, the Nikkei 225 was up 0.89% at 21,250.09, as the yen strengthened 0.18% against the dollar to last trade at JPY 109.65.

Of the major components on the Tokyo benchmark, automation specialist Fanuc was down 0.39%, while fashion firm Fast Retailing rose 1.02% and technology conglomerate SoftBank improved 2.23%.

Electronics giant Sony rocketed ahead 9.89% after it announced a share buyback worth up to JPY 200bn, as well as a new partnership with American computing behemoth Microsoft.

The broader Topix index added 1.09% to close its session at 1,554.25.

On the mainland, the Shanghai Composite fell 2.48% to 2,882.30, and the smaller, technology-heavy Shenzhen Composite slid 3.26% to 1,533.22.

South Korea’s Kospi was down 0.58% at 2,055.80, while the Hang Seng Index in Hong Kong was 1.16% below the waterline at 27,946.46.

The blue-chip technology stocks in Seoul were both in the red, with Samsung Electronics was down 0.84% and chipmaker SK Hynix off 0.42%.

Sentiment was becoming more depressed in the region as May stretched on, given investors had priced in the US and China reaching a trade deal at the start of the month.

Instead, the White House surprised markets by hiking punitive tariffs on $200bn of Chinese goods to 25% from 10%, with China retaliating by raising charges on $60bn of US goods.

President Trump made matters more concerning this week, declaring a national emergency around what he described as threats against US technology.

That lead to the US Department of Commerce adding Huawei Technologies and its associated companies to the ‘Entity List’ of the Bureau of Industry and Security, which would make it harder for the Chinese telecoms equipment giant to do business with American firms.

“The street appears to have temporarily given up trying to predict the fluid situation that is US-China trade relations and concentrate on the here and now,” said Oanda’s Jeffrey Halley on how American investors were reading the situation.

Oil prices were higher as the region entered the weekend, with Brent crude last up 0.71% at $73.14 per barrel, and West Texas Intermediate adding 1.13%.

In Australia, the S&P/ASX 200 was ahead 0.59% at 6,365.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out gains of 0.04% to close at 10,180.80.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.26% at AUD 1.4546, and the Kiwi retreating 0.16% to NZD 1.5324.