November 12, 2019: Asian markets were mixed in early trade Tuesday with investors keeping tabs on the latest developments in the China-US trade talks, while Hong Kong staged a minor recovery after the previous day's steep losses.
The pound built on gains after British Prime Minister Boris Johnson was given a boost by news the Brexit party would not run against his Conservatives in hundreds of seats in next month's general election.
While there is a broad expectation China and the US will eventually reach a mini trade pact, the waters were muddied over the weekend after Donald Trump appeared to dismiss Beijing's claims they had agreed a plan to roll back tariffs as the talks progress.
The comments reminded dealers that the negotiations, while advancing, remained fragile and that a wider, deal will have some bumps along the way.
“Markets have been skittish,” Matt Forester, chief investment officer at BNY Mellon's Lockwood Advisors, said.
“We will need more concrete information about the structure and timing of any kind of final trade arrangement, but in the meantime we are operating on scraps of information.”
Stephen Innes at AxiTrader said a speech by Trump at the New York Economic Club later in the day “could be the main event this week, especially if the president dangles any tangible details about his upcoming meeting with President Xi (Jinping)”.
– Sterling election boost –
Hong Kong edged up but traders moved cautiously after stocks plunged more than two percent Monday as the city was wracked by some of the worst violence seen during months of protests, in which one person was shot and another set on fire.
The city remains on edge, with sporadic protests taking place on Tuesday, while the US expressed “grave concern” over the situation in Hong Kong and called for restraint by security forces and protesters.
“It is the 24th week of unrest and it is still very unclear what can de-escalate the situation,” said National Australia Bank's Tapas Strickland. However, he added: “Nevertheless, for as long as Beijing gives Hong Kong latitude to deal with the protests, it is likely the unrest will only have an isolated impact on financial markets.”
Tokyo ended the morning session up 0.2 percent, Singapore added 0.3 percent, Taipei gained 0.4 percent and Seoul was up 0.1 percent.
However, Shanghai shed 0.2 percent and Sydney fell 0.5 percent. Wellington, Manila and Jakarta were also down.
Markets welcomed news that Nigel Farage, a leading force behind Britain's 2016 referendum to leave the European Union, would not stand his Brexit party candidates in 317 seats held by the Johnson's Conservatives during the December 12 poll.
“The Brexit party would contest Labour-held seats… The market took that as a sign of reducing the chances of a hung parliament or the probability of a (Jeremy) Corbyn-led Labour minority government,” Strickland added.
The pound rallied against the dollar and euro Monday and edged higher still in Asia, with support also coming from data showing Britain's economy had avoided dropping into recession in the third quarter.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 23,370.19 (break)
Hong Kong – Hang Seng: UP 0.4 percent at 27,038.48
Shanghai – Composite: DOWN 0.2 percent at 2,904.78
Pound/dollar: UP at $1.2860 from $1.2855 at 2100 GMT
Euro/pound: DOWN at 85.76 pence from 85.81
Euro/dollar: DOWN at $1.1030 from $1.1032
Dollar/yen: UP at 109.17 yen from 109.05 yen
West Texas Intermediate: DOWN eight cents at $56.78 per barrel
Brent North Sea crude: DOWN three cents at $62.15 per barrel
New York – Dow: FLAT at 27,691.24 (close)
London – FTSE 100: DOWN 0.4 percent at 7,328.54 (close)