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Asia markets advance as ZTE shares jump in Hong Kong and Shenzhen

Key Points
  • Asia markets gained on Friday as investors awaited U.S. nonfarm payrolls numbers due later in the day.
  • Shares of ZTE surged in Friday trade after Italy's new government exercised its special powers on Thursday for supply deals with local firms involving the Chinese telecommunications giant as well as Huawei.
  • Investors also watched for developments on the trade front a day after global markets rallied on the back of news that the U.S. and China could return to the negotiating table next month.
  • China's Ministry of Commerce said Thursday that Liu He, the country's top trade negotiator, spoke by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

Asia markets gained on Friday ahead of U.S. nonfarm payrolls numbers due later in the day. Investors also watched for developments on the trade front after global markets rallied on the back of news that the U.S. and China could return to the negotiating table next month.

Mainland Chinese stocks rose on the day, with the Shanghai composite gaining 0.46% to about 2,999.60 and the Shenzhen component adding 0.41% to 9,823.42. The Shenzhen composite advanced 0.355% to approximately 1,657.50.

Hong Kong's Hang Seng index also added 0.56%, as of its final hour of trading. Ratings agency Fitch downgraded the city from "AA+" to "AA" on Friday, following a protracted period of unrest that has lasted for months.

China's Ministry of Commerce said Thursday that Liu He, the country's top trade negotiator, spoke by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. They agreed to meet in early October for another round of negotiation, according to the Chinese Commerce Ministry. China insiders have also hinted that the upcoming trade talks could lead to a 'breakthrough.'

A U.S. Trade Representative spokesperson confirmed to CNBC the phone call between the two sides but not the October meeting.

In Japan, the Nikkei 225 closed 0.54% higher at 21,199.57, while the Topix index added 0.17% to finish the trading day at 1,537.10. Government data showed on Friday that household spending in the country rose for an eighth straight month in July, though the pace of growth was slower than expected. Household expenditure increased 0.8% in July as compared to a year earlier, missing expectations of a 1.1% gain in a median forecast, Reuters reported citing government data.

South Korea's Kospi ended 0.22% higher at 2,009.13, while the S&P/ASX 200 in Australia advanced 0.52% to close at 6,647.30.

Overall, the MSCI Asia ex-Japan index rose 0.59%.

The session in Asia followed strong overnight gains on Wall Street that saw the Dow Jones Industrial Average surging more than 350 points.

ZTE shares jump

ZTE shares surged in Friday trade after Italy's new government approved Rome's use of special powers in 5G telecommunication services supply deals between a number of domestic companies and providers including China's ZTE and Huawei.

Hong Kong-listed shares of ZTE surged 8.78%, as of their final hour of trading, while their Shenzhen-listed counterpart soared 9.27% on the day.

It was reported by Reuters that the decision to strengthen Rome's hands reflected concerns over Huawei and ZTE's involvement in the development of the next generation of ultra high-speed mobile networks known as 5G.

For its part, the United States has lobbied allies in Europe, which includes Italy, to not use Huawei equipment and closely scrutinize ZTE, alleging that they pose national security risks. Both Chinese companies have denied those allegations.

US nonfarm payrolls awaited

On the data front, the U.S. government's monthly nonfarm payrolls data is due later on Friday, where investors will look for signs about the health of the U.S. economy. Private payrolls in the U.S. grew by 195,000 in August, beating a 140,000 estimate from economists surveyed by Dow Jones, according to a report from ADP and Moody's Analytics released Thursday. That data is seen as a preview for the U.S. government's nonfarm payrolls report.

"We forecast US non‑farm payrolls gains of 150k in August (consensus: 160k) in today's labour market report, but there now appear upside risks to the number," Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, wrote in a morning note.

The payrolls data will be important because business outlook and manufacturing trends around the world are weak and consumer sentiment is only holding up because people still have jobs, Anthony Raza, head of multi-asset strategy at UOB Asset Management, told CNBC's "Squawk Box" on Friday.

"If the weakness in business starts to cut back on jobs, starts to do layoffs, then, in fact, that's way too early to be too confident about the cycle at this point," Raza said, adding it is still a "critical, risky period that we're going through."

Asia-Pacific Market Indexes Chart

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.347 climbing from levels around 98.1 yesterday.

The Japanese yen traded at 106.98 against the dollar after weakening from levels below 106.4 in the previous session, while the Australian dollar was at $0.6825 after rising from levels below $0.68 yesterday.

Oil prices dipped in the afternoon of Asian trading hours, with international benchmark Brent crude futures just below the flatline at $60.93 per barrel and U.S. crude futures slipping fractionally to $56.26 per barrel.

— Reuters and CNBC's Evelyn Cheng and Fred Imbert contributed to this report.