Asian markets mixed as traders prepare for crucial week
28 Jan 2019
Asian markets were mixed Monday as investors look ahead to a week chock-full of crucial events, including high-level trade talks between China and the United States.
Hopes that a deal can be struck between the world's top two economies have helped fuel a rally this month in global equities, which had been hammered in December.
While there have been conflicting reports on the likelihood of an agreement to end the trade war, analysts say it is in the interests of both sides to reach a deal, with China's economy stuttering and President Donald Trump gearing up for his re-election campaign.
"Although coming to an agreement is still tricky, both sides have little incentive to escalate tensions," said Tai Hui, chief market strategist for Asia-Pacific at JP Morgan Asset Management.
"Markets will at least expect an extension of the truce in tariff increases beyond early March, while more difficult issues are still being worked on by both sides."
As well as the Wednesday-Thursday meeting in Washington, dealers also have in their sights the Federal Reserve's latest policy meeting, where the central bank's statement will be pored over for an idea about its interest rate plans.
Also coming up is the release of US jobs and economic growth data, Chinese manufacturing activity results, another vote on Prime Minister Theresa May's Brexit deal and a number of big-name earnings, including from Apple, Samsung, Facebook and Alibaba.
After starting the day on a positive note regional markets went south as investors contemplate what the week has in store, while China released another batch of disappointing data showing profits at the country's industrial firms fell in December.
Shanghai ended down 0.2 percent while Hong Kong was flat and Tokyo dropped 0.6 percent. Singapore skidded 0.1 percent, while Seoul was marginally lower and Mumbai dropped 0.9 percent.
However, Manila rose 0.3 percent, Taipei put on 0.4 percent and there were also gains in Wellington and Bangkok.
In early trade London dipped 0.2 percent, Paris shed 0.5 percent and Frankfurt lost 0.3 percent.
Fragile shutdown truce
Wall Street provided a positive lead after another batch of upbeat earnings reports, though observers said there was little major reaction to news that Trump had agreed to re-open the government after public services started to buckle in the longest-ever shutdown.
However, the deal that will see 800,000 workers finally get paid will only last a week and did nothing to resolve the row over the president's demand for billions of dollars to pay for a Mexican border wall.
"While Democrats appeared to have won this battle, the government is only opened until February 15th, and this band-aid will have trouble leading to a permanent solution as both sides are nowhere near a bending on (their) positions," said OANDA market analyst Edward Moya.
The pound dipped but was holding up against the dollar ahead of Tuesday's vote on May's revised Brexit deal, with many believing that even if it is kicked out by MPs, Britain will still not leave the European Union without an agreement.
There is a growing sense that May will seek a delay in the country's leaving date to give her more time to reach a deal.
"The pound has made some decent gains over the past few weeks on the basis that a 'no deal' Brexit seems a much more distant prospect," Michael Hewson, chief market analyst at CMC Markets, said in a note.
"A lot of this still seems more like wishful thinking than anything else, given the parliamentary arithmetic, as well as the politics. Markets seem to have a lot more faith in politicians than many think they deserve."
Hong Kong-listed Russian aluminium giant Rusal jumped 9.4 percent after the US Treasury Department lifted sanctions on it and two related companies after blacklisted billionaire Oleg Deripaska took action to sharply cut his stake in them.(AFP)
Key figures around 0820 GMT
Tokyo - Nikkei 225: DOWN 0.6 percent at 20,649.00 (close)
Hong Kong - Hang Seng: FLAT at 27,576.96 (close)
Shanghai - Composite: DOWN 0.2 percent at 2,596.98 (close)
London - FTSE 100: DOWN 0.2 percent at 6,793.69
Euro/dollar: DOWN at 1.1408 USD from 1.1413 USD at 2130 GMT Friday
Pound/dollar: DOWN at 1.3176 USD from 1.3200 USD
Dollar/yen: DOWN at 109.34 yen from 109.48
Oil - West Texas Intermediate: DOWN 74 cents at 52.95 USD per barrel
Oil - Brent Crude: DOWN 75 cents at 60.89 USD per barrel
New York - Dow: UP 0.8 percent at 24,737.20 (close)