Asian markets edge up but US-China trade war uncertainty lingers
Asian markets began to recover on Friday after hitting three-week lows the day before, but gains were subdued by investor caution over the chance of a US-China trade deal being struck.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.13 per cent by 7.30am UK time.
The index had dropped as much as 1.4 per cent on Thursday to its lowest level since 30 October on concerns that US legislation on Hong Kong threatened to undermine trade talks.
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Hong Kong’s Hang Seng index was trading 0.31 per cent up early on Friday, while Japan’s Nikkei 225 also closed in the green, having edged up 0.32 per cent.
Shanghai’s SSE Composite index bucked the upward trend to close 0.63 per cent down to curb Asian markets’ rise.
“Equity markets remain cautious given the numerous stops and starts, not to mention dead ends, these trade discussions have met with,” said Axitrader analyst Stephen Innes.
Markets showed little reaction to President Xi Jinping’s reiteration on Friday that China wants to avoid a trade war with the US, but is not afraid to retaliate if necessary.
“We want to work for a ‘phase one’ agreement on the basis of mutual respect and equality,” Xi told representatives of an international forum, according to Reuters.
“When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want.”
Uncertainty over the progress towards a trade deal remains, however, with President Donald Trump expected to sign into law two bills backing protestors in Hong Kong.
The US House of Representatives voted 417 to 1 in favour of the “Hong Kong Human Rights and Democracy Act” on Thursday, which had unanimously passed the Senate the day before.
The bills would require the US State Department to certify at least once a year that Hong Kong has sufficient autonomy from Beijing to qualify for the special trading consideration from the US that helped it become a global financial centre.
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It also contains provisions for sanctions against officials responsible for human rights violations in the territory, which is governed by China under a “one country, two systems” framework.
The House also passed a second bill banning the export of some crowd control munitions – such as tear gas, pepper spray, rubber bullets and stun guns – to the Hong Kong police force.
Main image credit: Getty