Asian shares were mostly higher Friday but benchmarks in Shanghai and Hong Kong gave up earlier strong gains amid uncertainty over the potential outcome of trade talks between China and the U.S.
The Trump administration rose tariffs to 25% from 10% on $200 billion of Chinese goods at 12:01 a.m. Friday. Still, President Donald Trump said Thursday he had received a “beautiful” letter from China’s President Xi Jinping and said a trade deal with China was still possible this week. U.S. and Chinese negotiators agreed to meet again Friday, in a positive sign following speculation that Thursday’s meeting in Washington was simply perfunctory.
The tariff hikes reportedly won’t hit goods that have already left Chinese ports before Friday’s deadline, so they won’t start taking affect until those shipments complete the three- to four-week voyage across the Pacific Ocean, in effect buying negotiators a little time to still work out a deal.
“The U.S. may deliver on its threat of higher tariffs on Chinese products and China may reciprocate. The markets maybe priced in all this, but a knee-jerk selling looks inevitable,” says Prakash Sakpal, economist at ING.
China has threatened to retaliate if President Donald Trump goes ahead with the tariff hikes, adding to the heated rhetoric from both sides that was shaking stock markets around the world.
Negotiators from both countries met Thursday and are continuing to meet Friday.
Asian stock markets started the trading day strong, but started losing their gains as the tariff deadline neared. Japan’s Nikkei NIK, -0.48% gave up initial gains and was last in negative territory, and Hong Kong’s Hang Seng Index HSI, +0.64% was up 0.8%, after rising about 1.2% early on. The Shanghai Composite SHCOMP, +1.50% advanced 1.5% and the smaller-cap Shenzhen Composite 399106, +1.82% jumped 1.8%. South Korea’s Kospi SEU, +0.07% inched up 0.1%, while benchmark indexes in Taiwan Y9999, -0.02% , Singapore STI, +0.12% and Indonesia JAKIDX, -1.14% were mixed. Australia’s S&P/ASX 200 XJO, -0.05% gained 0.1%.
Among individual stocks, Takeda Pharmaceutical 4502, +3.13% rose a day after selling about $5.3 billion in assets to Novartis NVS, -1.09% and Johnson & Johnson’s JNJ, -0.76% Ethicon to help pay down debt. Fast Retailing 9983, +0.35% and Honda 7267, -0.42% also advanced in Tokyo trading. In Hong Kong, Sunny Optical 2382, +4.70% surged higher, and Tencent 0700, +1.49% and CSPC Pharmaceutical 1093, +1.48% also rose. Samsung 005930, +0.82% gained in South Korea. Fortescue Metals FMG, +0.80% and Oil Search OSH, +0.00% moved higher in Australia.
Benchmark U.S. crude CLM9, +0.47% rose 44 cents to $62.14 a barrel in electronic trading on the New York Mercantile Exchange. It dropped 0.7% to settle at $61.70 per barrel overnight. Brent crude LCON9, +0.31% , the international standard, added 34 cents to $70.72 a barrel.
The dollar USDJPY, -0.04% inched up to 109.88 Japanese yen from 109.77 yen.
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