Asia Markets

Asia stocks mixed as hope rises on US-China trade, S&P 500 hits record high

Key Points
  • Asia stocks were mixed on Tuesday.
  • The Office of the U.S. Trade Representative said Monday that Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China.
  • Overnight on Wall Street, the S&P 500 scaled a record high as investors stateside cheered strong earnings and optimism on U.S.-China trade.

Major Asian markets were mixed on Tuesday as investors monitored further developments on the U.S.-China trade front, with the two economic powerhouses working toward a deal.

In Japan, the Nikkei 225 rose 0.47% to close at 22,974.13 while the Topix gained 0.86% to finish its trading day at 1,662.68.

South Korea's Kospi closed slightly lower at 2,092.69. The S&P/ASX 200 in Australia rose fractionally to end its trading day at 6,745.40.

The Hang Seng index in Hong Kong reversed earlier gains as it declined 0.39%, with Hong Kong-listed shares of HSBC dropping 1.24% after the lender reported third-quarter pre-tax profits that dropped 18% year-on-year.

Meanwhile, Hong Kong Chief Executive Carrie Lam said Tuesday she expects the city to book negative growth for 2019, Reuters reported, amid ongoing protests that have lasted for months.

Mainland Chinese stocks fell on the day. The Shanghai composite shed 0.87% to about 2,954.18 and the Shenzhen component was 0.57% lower at 9,746.03. The Shenzhen composite also declined 0.938% to approximately 1,642.68.

Overall, the MSCI Asia ex-Japan index traded 0.23% higher.

US-China trade

Investors continue to watch for developments in U.S.-China trade. The Office of the U.S. Trade Representative said Monday that Washington will consider extending certain tariff exclusions on $34 billion worth of imports from China. The USTR said last week that China and the U.S. are close to finalizing a phase one deal.

For his part, U.S. President Donald Trump said the deal with China is expected to be signed "ahead of schedule," but did not elaborate on the timing, Reuters reported.

"The two sides have seemingly reached consensus in areas including standards used by agricultural regulators, but is probably worth noting that so far neither party has officially said anything about the contentious issue surrounding China's demand for a pullback on US Tariffs," Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a morning note.

"Given the ups and downs we've seen over the last year or more on this front, i think it's very hard to say firmly: 'Yes, this is the definitive deal. Yes, it's the end of these issues,'" Hugh Young, head of Asia Pacific at Aberdeen Standard Investments, told CNBC's "Squawk Box" on Tuesday.

"I don't think it will be done and dusted and we won't be speaking about it in a year's time, I suspect we will still be speaking about it in a year's time," Young said, citing issues as the competition between the U.S. and China for supremacy in the 5G wireless technology space.

Overnight on Wall Street, the S&P 500 scaled a record high as investors stateside cheered strong earnings and optimism on U.S.-China trade. The S&P 500 added 0.6% to close at 3,039.42 — above its previous record set on July 26. The Dow Jones Industrial Average rose 132.66 points to end its trading day at 27,090.72 while the Nasdaq Composite gained 1% to close at 8,325.99.

Of the 206 S&P 500 companies that reported through Monday morning, 78% have topped analyst expectations, according to FactSet.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.796 after touching highs above 97.8 yesterday.

The Japanese yen traded at 108.95 against the dollar after weakening from levels below 108.9 in the previous session.

The Australian dollar changed hands at $0.6853 after an earlier low of $0.6832. The moves came after Reserve Bank of Australia Governor Philip Lowe said in a speech on Tuesday that it is "extraordinarily unlikely" that the country will see negative interest rates.

Oil prices shed earlier gains to slip in the afternoon of Asian trading hours, with international benchmark Brent crude futures 0.41% lower at $61.32 per barrel and U.S. crude futures declining 0.5% to $55.53 per barrel.

— CNBC's Lauren Hirsch and Fred Imbert contributed to this report.