Asia Markets

Japan jumps more than 2% as U.S.-China tensions heat up; oil prices fall

Key Points
  • Shares in Asia Pacific were mixed on Thursday.
  • Developments on U.S.-China relations likely continued to be monitored by investors, as tensions between the two economic powerhouses mount.

Stocks in Asia Pacific were mixed on Thursday as mounting U.S.-China tensions weighed on investor sentiment.

Japanese stocks led gains among the major regional markets, with the Nikkei 225 rising 2.32% to close at 21,916.31 as shares of index heavyweight Fast Retailing jumped 3.7%. The Topix index also advanced 1.8% to finish its trading day at 1,577.34.

Hong Kong's Hang Seng index slipped 1.11%, as of its final hour of trading, with shares of Chinese tech giant Tencent dropping 2.95%. Mainland Chinese stocks were mixed on the day, with the Shanghai composite up 0.33% to about 2,846.22 while the Shenzhen component slipped 0.273% to around 10,653.49.

Elsewhere, the S&P/ASX 200 in Australia jumped 1.32% to close at 5,851.10 after Reserve Bank of Australia Governor Philip Lowe told lawmakers that "it is possible that the economic downturn will not be severe as earlier thought."

Meanwhile, South Korea's Kospi dipped 0.13% to end its trading day at 2,028.54.

Overall, the MSCI Asia ex-Japan index was fractionally lower.

"Markets have gone from being extremely cheap … and pricing in you know, a very negative economic to … almost pricing in a return to normal, whatever that looks like," Martin Crabb, chief investment officer at Shaw and Partners, told CNBC's "Capital Connection" on Thursday.

"The value that we have seen in markets has almost disappeared and a lot of that's happened in the past, you know, few trading days," Crabb said. ""We're now looking at highly risky, lower return equity markets."

Rising U.S.-China tensions

Developments on U.S.-China relations likely continued to be monitored by investors, as tensions between the two economic powerhouses mount.

U.S. Secretary of State Mike Pompeo told Congress on Wednesday that Hong Kong was no longer autonomous from China, raising questions over the special administrative region's favorable trade relationship with the U.S. as well as opening up the possibility of sanctions on Chinese officials. Pompeo's comments came following the proposal of a national security law from Beijing that has spurred protests in Hong Kong.

The House of Representatives on Wednesday also passed legislation condemning China for the detention and torture of Uighur Muslims in the country's western region of Xinjiang.

Oil prices drop

Oil prices remained lower in the afternoon of Asian trading hours, with international benchmark Brent crude futures declining 2.27% to $33.95 per barrel. U.S. crude futures also fell 3.29% to $31.73 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.885 after seeing levels above 99.6 earlier in the trading week.

The Japanese yen traded at 107.81 per dollar after weakening from levels below 107.6 yesterday. The Australian dollar changed hands at $0.6619 after dropping from levels above $0.665 yesterday.

— CNBC's Tucker Higgins contributed to this report.