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Asian markets mixed; China lowers its growth target

Key Points
  • Markets in Asia were mixed.
  • At the opening of China's National People's Congress, Chinese Premier Li Keqiang said the country must be prepared for a "tough struggle" as it faces a "grave and more complicated environment."
  • Li warned that trade tensions between Beijing and Washington had a negative impact on business activity in China.
  • Elsewhere in Asia, stocks in Japan, South Korea and Australia declined.

Markets in Asia were mixed by the end of Tuesday, with China announcing at its annual parliamentary meeting that it has cut its growth target.

Shares in mainland China were higher, with the Shenzhen component rising 2.252 percent to 9,595.74 and the Shanghai composite advancing 0.88 percent to 3,054.25. The Shenzhen composite advanced 2.282 percent to 1,635.98.

Hong Kong's Hang Seng index was around 0.1 percent higher, as of its final hour of trading.

China kicked off its annual parliamentary meeting, the National People's Congress, on Tuesday where Premier Li Keqiang said the country must be prepared for a "tough struggle" as it faces a "grave and more complicated environment."

Official economic growth target this year, he said, will be 6.0 to 6.5 percent, lower than the growth of 6.6 percent in 2018, the slowest pace since 1990.

"I think the bigger point here is that they're trying to essentially avoid crashing the economy with excess debt while avoiding a very severe downturn in economic activity," Andrew Collier, managing director at Orient Capital Research, told CNBC's "Street Signs" on Tuesday.

"A combination of domestic stimulus and a trade deal with the US over the next few weeks could be the shot in the arm the Chinese economy needs and lead to a dramatic increase in investor sentiment globally," analysts at Rakuten Securities Australia said in a note. "At the moment we're still in a 'wait and see' situation but this week could see the first part of that equation put in place."

Elsewhere in Asia, other major stock markets closed lower: Japan's Nikkei 225 slipped 0.44 percent to 21,726.28, as shares of index heavyweight Softbank Group declined 1.78 percent, while the Topix shed 0.51 percent to 1,619.23.

The Kospi in South Korea fell 0.52 percent to 2,179.23, with chipmaker SK Hynix seeing its stock slip 0.57 percent.

In Australia, the ASX 200 shed 0.29 percent to 6,199.30, with majority of the sectors lower on the day. The moves Down Under came after the country's central bank announced it was keeping interest rates steady at 1.50 percent.

The Australian dollar was at $0.7076 following the Reserve Bank of Australia's interest rate decision after touching an earlier high of $0.7096.

Asia-Pacific Market Indexes Chart

Wall Street declined

Overnight on Wall Street, stocks declined as the S&P 500 shed 0.4 percent to finish its trading day at 2,792.62, falling back below the 2,800 level it breached last Friday — its highest close since Nov. 8. The Dow dropped 206.67 points to close at 25,819.65, while the Nasdaq Composite declined 0.2 percent to finish its trading day at 7,577.57.

The declines stateside were attributed to the possibility that optimism over a trade deal being reached between the U.S. and China was already priced by the markets.

"We have some sympathy for this view, though wouldn't underestimate Mr. Market's ability to discount the 'same news twice' if and when a deal is done in," Ray Attrill, head of foreign exchange strategy at National Australia Bank, said in a morning note.

"In this respect, one still-nagging doubt on a trade deal surrounds Huawei, where the apparent response to the weekend news that Canada has agreed to extradite the Chinese technology behemoth's CFO to the United States, has been to accuse the two Canadians detained by China last month soon after the arrest of the Huawei CFO of spying," Attrill said.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.771 after seeing lows around 96.3 yesterday. The Japanese yen traded at 111.92 against the dollar after seeing an earlier high of 111.70.

Oil prices slipped Tuesday afternoon during Asian hours, with the international benchmark Brent crude futures contract declining 0.46 percent to $65.37 per barrel. U.S. crude futures also slipped 0.53 percent to $56.29 per barrel.

— CNBC's Evelyn Cheng contributed to this report.