Asian shares decline on revived jitters over trade deal
BANGKOK, Jan 15: Shares retreated in Asia on Wednesday as conflicting reports raised concerns over the likely outcome of a trade deal to be signed by the US and China.
Japan's Nikkei 225 index lost 0.5per cent to 23,916.58 while the Hang Seng in Hong Kong dropped 0.6per cent to 28,722.86. The Shanghai Composite index gave up 0.5per cent to 3,090.04. In South Korea, the Kospi slipped 0.4per cent to 2,230.98. Shares also fell in Taiwan and in Southeast Asia. But the S&P ASX 200 climbed 0.5per cent, breaching an intra-day record high, to 6,994.80, on optimism over the preliminary trade agreement due to be signed later in the day.
The declines followed a mixed session on Wall Street Tuesday as investors parsed the latest indications on trade relations between the two largest economies. Traders were spooked by a report that US tariffs would remain in place on Chinese goods even after a preliminary deal is signed Wednesday.
The Wall Street Journal reported that the Trump administration was preparing to further tighten controls on technology exports to Huawei Technologies.
The trade deal may only mark a "detente" in trade tensions, said Stephen Innes of AxiTrader.
"But I think after two years of trade war noise, hopefully, the markets have learned to take all the bluster with a grain if not a barrel of salt," Innes said.
Overnight, major US stock indexes shed most of their gains from earlier in the day after a report said the interim trade deal between the US and China does not remove tariffs on Chinese goods.
Technology stocks accounted for much of the selling. The sector is particularly sensitive to developments in trade relations because many of the companies rely on China for sales and supply chains.
Nvidia led Tuesday's slide, dropping 1.9per cent. Health care stocks led the gainers, receiving a big boost from Perrigo, which vaulted 12.6per cent. Boston Scientific fell 6.2per cent after giving Wall Street a weak fourth-quarter sales update.
"Would the market be more satisfied with a reduction in those tariffs? Absolutely," said Quincy Krosby, chief market strategist at Prudential Financial. "Nonetheless, you don't want to have an escalation in the tariff war. That was the most important thing for the market."
The S&P 500 index fell 0.2per cent to 3,283.15 after gaining as much as 0.2per cent earlier. The Nasdaq slid 0.2per cent to 9,251.33.
The Dow rose 0.1per cent to 28,939.67, while the Russell 2000 index of smaller company stocks climbed 0.4per cent, to 1,675.74.
Bond prices rose. The yield on the 10-year Treasury slipped to 1.81per cent from 1.84per cent late Monday.
President Donald Trump and China's chief negotiator, Liu He, are scheduled to sign a modest trade pact Wednesday that calls for the US to ease some sanctions on China. The US dropped its designation of China as a currency manipulator ahead of the signing. -AP