Asia report: Markets mostly higher after Navarro trade deal roller coaster
Markets in Asia closed mostly higher on Tuesday, as investors digested comments from White House advisor Peter Navarro that the US-China trade deal was still in place.
In Japan, the Nikkei 225 was up 0.5% at 22,549.05, as the yen weakened 0.13% against the dollar to last trade at JPY 107.05.
Of the major components on the benchmark index, robotics specialist Fanuc was down 0.18%, Uniqlo owner Fast Retailing lost 0.1%, and technology giant SoftBank Group retreated 0.27%.
The broader Topix index managed gains of 0.51% by the end of trading in Tokyo, closing at 1,587.14.
Fresh data out of Japan was mixed, showing parts of the economy still in contraction, with the manufacturing purchasing managers’ index coming in at 37.80, while the services PMI jumped to 42.30, from 26.50 in May.
Anything below 50 points signals contraction, while a reading above that is an indication of expansion.
On the mainland, the Shanghai Composite was ahead 0.18% at 2,970.62, and the smaller, technology-focussed Shenzhen Composite rose 0.56% to 1,947.45.
South Korea’s Kospi was 0.21% firmer at 2,131.24, while the Hang Seng Index in Hong Kong added 1.62% to 24,907.34.
Chinese technology giant Tencent Holdings rocketed to a new record high in the special administrative region, closing 4.89% higher.
Both of the blue-chip technology stocks were weaker in Seoul, however, with Samsung Electronics down 1.15%, and chipmaker SK Hynix off 0.94%.
Sentiment was relatively positive during the session, after Peter Navarro said overnight that his earlier comments to Fox News around US-China relations - which had led to concerns around the US-China trade deal - “had nothing to do with the trade deal at all”.
Martha MacCallum of Fox asked the White House advisor that, “given everything that happened and all the things you just listed”, whether the trade deal with the People’s Republic was over.
“It’s over. Yes,” he responded.
However, following that interview, Navarro told CNBC that his comments were taken “wildly” out of context.
“I was simply speaking to the lack of trust we now have of the Chinese Communist Party, after they lied about the origins of the China virus and foisted a pandemic upon the world,” he explained.
US president Donald Trump also weighed in via his favourite medium, Twitter, typing that the “China Trade Deal is fully intact”.
Jeffrey Halley, senior Asia-Pacific market analyst at OANDA, said the turbulent series of headlines gave financial markets a scare, with US index futures and Asian stocks gapping lower, and “fast money” buying dollars.
“Those moves have been almost wholly unwound now, with Asia practically back to its pre-comment starting points.
“Indeed, Asia had a business-as-usual look to it this morning following a positive US session.
“That being, ignore the bad news regarding Covid-19 - of which there was plenty - and buy everything on global recovery hopes.”
Oil prices were higher at the end of the Asian day, with Brent crude last up 0.72% at $43.39 per barrel, and West Texas Intermediate rising 0.64% to $40.99.
In Australia, the S&P/ASX 200 was 0.17% higher at 5,954.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.23% weaker, closing at 11,132.58.
In fresh data out of Australia, the country’s manufacturing PMI climbed back to what Jeffrey Halley called an “almost expansionary” 49.20, while services PMI rose to an expansionary 53.20.
Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.19% at AUD 1.4447, and the Kiwi advancing 0.06% to NZD 1.5423.