Oct 10, 2019: Asian markets rose Thursday but investors moved cautiously as they sifted through conflicting reports about the outlook for upcoming China-US trade talks.

Global investors have been broadly upbeat in recent weeks that the meeting in Washington between top-level representatives would see at least some progress.

But with the much-anticipated gathering due to start within hours, Hong Kong's South China Morning Post reported pre-meeting discussions had not made any progress on key areas such as forced technology transfers, and would be cut in half to just one day.

That came after Wall Street's three main indexes had ended with healthy gains on reports that a pared-down deal was still possible, with Beijing boosting agricultural purchases and the US delaying the imposition of new tariffs next week.

Tensions were already showing this week after the US unveiled restrictions on 28 Chinese entities over human rights violations in Xinjiang province and imposed visa restrictions on some officials, while a report said the White House was considering curtailing US investment in the country.

For its part, sources were reported to have said China had narrowed the issues it was willing to discuss as it felt in a stronger position owing to Donald Trump facing an impeachment inquiry at home and a weakening economy.

The SCMP report “reverses the trade optimism that was dominating overnight flow as investors were hoping that at minimum, some type of a deal could be forged”, said Stephen Innes, Asia-Pacific market strategist at AxiTrader.

– 'Petals from a flower' –

“So instead of debating how encompassing the deal might be, investors are now back to plucking petals from a flower guessing if there will be a deal at all.”

On regional markets Shanghai and Hong Kong each rose 0.4 percent while Tokyo went into the break 0.5 percent higher. Sydney and Singapore each added 0.1 percent, with Manila and Jakarta also higher.

Wellington was flat and Seoul sank 0.8 percent.

In foreign exchanges, the dollar was lower against most other currencies after minutes from the Federal Reserve's September policy meeting showed it was growing concerned about the impact of Trump's trade war.

The central bank is expected to cut interest rates for a third time when the board meets again later this month.

The minutes “revealed greater concerns over downside risk from slowing global growth and trade tensions with subdued inflation also seen as a reason to cut”, said Rodrigo Catril at National Australia Bank.

But he pointed out that “a few officials saw the need to push back against market Fed rate cut expectations”.

Oil prices extended Wednesday's losses following data showing a bigger-than-forecast pick-up in US inventories that reinforced worries about the impact on demand from a global slowdown and trade frictions.

The data reversed a rally of more than one percent in the commodity that came after Turkey launched an offensive against Kurdish militants in northern Syria.

– Key figures around 0230 GMT –

• Tokyo – Nikkei 225: Up 0.5 percent at 21,555.67 (break)
• Hong Kong – Hang Seng: UP 0.4 percent at 25,775.22
• Shanghai – Composite: UP 0.4 percent at 2,935.45
• Pound/dollar: UP at $1.2219 from $1.2205 at 2050 GMT
• Euro/pound: UP at 89.92 pence from 89.89 pence
• Euro/dollar: UP at $1.0987 from $1.0972
• Dollar/yen: DOWN at 107.45 yen from 107.49 yen
• West Texas Intermediate: DOWN 21 cents at $52.38 per barrel
• Brent North Sea crude: DOWN 26 cents at $58.06 per barrel
• New York – Dow: UP 0.7 percent at 26,346.01 (close)
• London – FTSE 100: UP 0.3 percent at 7,166.50 (close).

AFP/APP

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