Asia Markets

China markets notch gains as Asia closes mostly lower; oil steady

Key Points
  • Asian shares closed lower on Tuesday.
  • Investors were focused on U.S.-China trade ties ahead of second round of negotiations expected this week.
  • Mainland markets gained despite mixed China data and following MSCI's index review.
  • Oil prices were steady following an OPEC report.

Slight gains seen during the U.S. session failed to translate into an advance in Asian stocks on Tuesday, with major markets in the region finishing the day in negative territory.

The hovered around the flat line, before closing lower by 0.21 percent, or 47.84 points, at 22,818.02. Gains seen in banking stocks, with Mitsubishi UFJ Group up 1.71 percent, were offset by declines in the real estate sector, among others.

Over in Seoul, the benchmark Kospi declined 0.71 percent to 2,458.54 as technology stocks weighed. Heavyweight Samsung Electronics fell 1.8 percent while chipmaker SK Hynix gave up early gains to slide 0.94 percent. Steelmakers and automakers also came under pressure.

In Hong Kong, the lost 0.88 percent by 3:22 p.m. HK/SIN after notching its sixth straight session of gains on Monday. Heavily weighted financials and technology shares were a drag on the benchmark, with Tencent down 2.72 percent before the market close.

Mainland markets closed higher following the release of mixed China data, which showed industrial output topped expectations while retail sales missed forecasts. Also in focus was MSCI's Tuesday announcement that 234 China A shares will be added to its indexes on June 1.

The advanced 0.58 percent to end at 3,192.58 and the Shenzhen composite rose 0.91 percent to 1,839.88.

In Sydney, the S&P/ASX 200 eased 0.61 percent to 6,097.80, with declines seen in all but the information technology subindex. Telecommunications stocks traded lower as Telstra fell 5.59 percent after its profit warning on Monday.

MSCI's broad index of shares in Asia Pacific excluding Japan was lower by 0.83 percent in Asia afternoon trade.

The broad move lower in major Asian markets followed a positive session on Wall Street, with U.S. stocks finishing slightly higher as investors focused on U.S.-China trade ties ahead of a second round of negotiations expected this week.

Of note, the yield on the benchmark 10-year U.S. Treasury note stood at 3.019 percent during Asian trade, after topping the 3 percent level in the last session.

Mixed signals on trade

Commerce Secretary Wilbur Ross on Monday said he hoped good relations between Trump and Xi would help to bring an agreement on trade matters, although he also acknowledged that the gap between the countries "remains wide."

That followed a tweet from President Donald Trump on Sunday about working to find a way for Chinese telecommunications equipment company ZTE "to get back into business, fast." That pledge comes after the U.S. government imposed a ban on U.S. companies on supplying ZTE with technology after the Chinese firm was found to have illegally shipped equipment to Iran.

Amid optimism that negotiations between the two countries, some analysts highlighted broader uncertainty regarding trade-related news flow.

"[I]t's all still very much a work in progress," David de Garis, director of economics at National Australia Bank, said in a note.

Declines in the region also followed the move higher seen in the last session, with Hong Kong's Hang Seng Index leading the advance. The benchmark closed up 1.35 percent on Monday.

Meanwhile, oil prices were steady after gains seen in the last session as OPEC raised its global oil demand estimate for the year. U.S. West Texas Intermediate crude futures slipped 0.07 percent to $70.91 per barrel and Brent crude futures edged lower by 0.04 percent to trade at $78.20.

Oil prices have risen generally amid production curbs, which began in 2017, led by the Organization of Petroleum Exporting Countries (OPEC).

"You have 24 countries: There's OPEC, non-OPEC, Vienna Alliance, and there's a real effort to cement that relationship. So even if the full cuts don't continue into 2019, there's a sense that this dialogue and partnership with Russia has been very productive, they don't want to let that go," Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC's "Capital Connection."

In individual movers, AAC Technologies fell 5.96 percent after the company on Monday announced first-quarter net profit that missed expectations.