Asia report: Markets fall as trade deal pessimism takes over

In Japan, the Nikkei 225 was down 0.48% at 23,038.58, as the yen strengthened 0.04% against the dollar to last trade at JPY 108.57.

Of the major components on the benchmark index, Uniqlo owner Fast Retailing managed gains of 0.21%, while automation specialist Fanuc lost 0.92% and technology giant SoftBank Group fell 1.61%.

Tokyo Electron was one of the big losers, ending the day down 3.44%.

The broader Topix index was off 0.1% by the end of the day, ending its session at 1,689.38.

On the mainland, the Shanghai Composite lost 0.25% to 2,903.64, and the smaller, technology-heavy Shenzhen Composite slipped 0.24% to 1,631.24.

South Korea’s Kospi was 1.35% weaker at 2,096.60, while the Hang Seng Index in Hong Kong lost 1.57% to close at 26,466.88.

Both of the blue-chip technology stocks in Seoul were in the red, with Samsung Electronics down 1.92% and SK Hynix losing 2.18%.

Sentiment continued to cool during the Asian session, after Reuters reported overnight that a partial trade deal between Washington and Beijing could be pushed into 2020.

That followed a story from the Wall Street Journal, which cited former officials in Donald Trump’s administration as saying that the current talks between the two economic superpowers could be reaching a major roadblock.

China responded on Thursday, with a Commerce Ministry spokesperson telling media that Beijing was trying its level best to reach some sort of phase one agreement with its counterparts across the Pacific.

Things were complicated further, however, after lawmakers in Washington passed the Hong Kong Human Rights and Democracy Act in response to ongoing political conflict in the special administrative region of China.

Investors had been holding out hope that some sort of agreement could be reached between the two countries before 15 December - a deadline the White House has imposed for a fresh round of punitive tariffs on goods imported from China.

“The Hong Kong angle has added weight to the argument that the US and China might not sign phase one of the trade agreement by the end of 2019,” said CMC Markets analyst David Madden.

“Significant progress has been made in recent weeks, but it is worth remembering the discussions were ‘about 90%’ complete in May, according to Steve Mnuchin.”

Oil prices were higher at the end of the Asian session, with Brent crude last up 0.11% at $62.47 per barrel, and West Texas Intermediate advancing 0.19% to $57.12.

In Australia, the S&P/ASX 200 was down 0.74%, closing its trading day at 6,672.90, with banking giant Westpac Banking Corporation down 1.99%.

That came after the country’s prime minister, Scott Morrison, said the company’s board should think “very deeply” over the CEO’s position.

On Wednesday, Westpac shares shed more than 3% in Sydney after AUSTRAC - the country’s anti-money laundering and terrorism financing agency - filed for civil penalties against the bank.

AUSTRAC said “oversight of the banking and designated services provided through its corresponding banking relationships was deficient” in its statement.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 lost 0.2% to close at 10,958.16, with retirement property developer Ryman Healthcare losing 0.7% after reporting profit gains at the lower end of analyst expectations.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.07% at AUD 1.4688, and the Kiwi advancing 0.22% to NZD 1.5547.