Asia Markets

Asia advances as markets shrug off US declines amid trade tensions

Key Points
  • Asian stocks closed higher on Monday, shrugging off declines seen stateside.
  • Trade tensions between the U.S. and China remained in focus, although market moves appeared to be less severe.
  • The dollar was firmer against the yen.

Stocks in Asia closed higher on Monday, as markets shrugged off declines seen on Wall Street after a week largely dominated by U.S.-China trade developments.

The edged up by 0.51 percent, or 110.74 points, to close at 21,678.26, after mostly directionless trade in the morning. The broader Topix also erased early losses and finished up 0.38 percent, with declines in the oil and coal subindex offset by gains in financials and retailers.

South Korea's Kospi advanced 0.6 percent to end at 2,444.08. The technology sector closed mostly higher, but losses were seen in steelmakers and automakers. Samsung Electronics rose 1.65 percent and Posco ended down 1.88 percent.

Greater China markets were also buoyant. Hong Kong's rose 1.35 percent by 3:05 p.m. HK/SIN, outperforming its regional peers as technology and financials stocks put in strong showings ahead of the market close. On the mainland, the rose 0.26 percent to 3,139.33 and the Shenzhen composite held above the flat line to close 0.01 percent higher at 1,831.83.

Meanwhile, Australia's S&P/ASX 200 rose 0.35 percent to 5,808.70 as all of its subindexes, with the exception of energy, closed in the green.

MSCI's broad index of shares in Asia Pacific excluding Japan was up 0.64 percent at 3:05 p.m. HK/SIN.

Those gains came despite the sharp fall in U.S. stocks on Friday amid trade concerns. The Dow Jones industrial average closed in correction territory, falling 2.34 percent, or 572.46 points, to close at 23,932.76.

Futures, however, suggested a positive start to the week for markets stateside, with Dow futures last higher by 200 points during Asia afternoon trade.

Trade concerns in focus

Markets have focused on the escalation in trade-related rhetoric between the U.S. and China in recent weeks, although fears appeared to have eased during Asian trade.

"[T]rade war fears are not as intense as they were last week," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in an early note.

U.S. stocks came under pressure in the last session after President Donald Trump said he had instructed U.S. trade officials to consider $100 billion in additional tariffs on Chinese goods. In response, China's Ministry of Commerce said on Friday that it would "fight back with a major response" if the U.S. went ahead with its plan.

Trump said in a tweet on Sunday that China would remove its trade barriers as that would be the "right thing to do." Markets also awaited Chinese President Xi Jinping's Tuesday speech at the Boao Forum.

Investors have been on edge over how heightened trade tensions between the world's two largest economies could result in a potential trade war. That could, in turn, dent global economic growth and corporate profits.

Some analysts, however, saw the escalation as a part of Trump's negotiating tactics and are hopeful about talks between the two countries.

"[W]e are starting to see a lessening in the severity of the moves, especially in the foreign exchange market where the market is looking for confirmation of action before committing to a trend," Rakuten Securities Australia said in a note.

Against the yen, the dollar firmed slightly to trade at 107.12 by 2:46 p.m. HK/SIN. The dollar index, which tracks the dollar against a basket of currencies, stood at 90.140.

On the commodities front, oil prices edged higher after settling more than 2 percent lower in the last session. U.S. West Texas Intermediate futures added 0.45 percent to trade at $62.34 per barrel. Brent crude futures advanced by 0.51 percent to trade at $67.45.

In individual movers, shares of aluminum producer Rusal fell 48.28 percent by 2:47 p.m. HK/SIN. The Hong Kong-listed company, which is headquartered in Russia, was included in a U.S. sanctions list, according to Reuters.

Besides trade concerns, markets also digested the release of March nonfarm payrolls on Friday. Nonfarm payrolls rose 103,000 last month, missing an expected gain of 193,000.

Also of note, Federal Reserve Chairman Jerome Powell said Friday that gradual interest rate increases were needed, although he did not say exactly how many rate hikes were necessary.