Nikkei slips; investors await U.S.-China trade talks later this week
Shares fell in Asia on Monday on caution over China-U.S. trade talks and over the ability of congressional negotiators to forge a government funding bill acceptable to President Donald Trump.
The Nikkei 225 index NIK, -0.43% closed down 0.6% with uncertainty over those trade talks bringing a lull in buying sentiment.
Hong Kong’s Hang Seng index HSI, +0.03% finished flat, while the Shanghai Composite index SHCOMP, -0.18% slipped 0.2% and the smaller-cap Shenzhen Composite 399106, -0.38% finished flat. The Kospi SEU, -0.22% in South Korea also closeed unchanged. Australia’s markets were closed for a national holiday.
Among individual stocks, Sony 6758, -0.63% and Hitachi 6501, -1.31% rose in Tokyo, while SoftBank 9984, -0.78% and Tokyo Electric 9501, +1.11% fell. In Hong Kong, Sunny Optical 2382, +0.00% and Tencent 0700, -0.64% were among the biggest gainers, while CSPC Pharmaceutical 1093, -4.11% sank. In Seoul, Samsung 005930, -0.22% rose after announcing it was phasing out plastic packaging, and LG Electronics 066570, -1.03% advanced while SK Hynix 000660, -0.14% declined.
There was muted reaction in U.S. markets on Friday to news that Trump and congressional leaders had reached a deal to reopen the federal government for three weeks while talks continue over Trump’s demands for money to build a wall along the U.S. border with Mexico. Trump announced the agreement to break the 35-day impasse as delays at airports and widespread disruptions heightened the urgency to end the partial shutdown. However, uncertainty persists since Trump almost immediately threatened another shutdown or emergency action if he does not get a “fair deal.”
“So the U.S. government being ‘open’ again is a relief. But the greater challenge ahead is to prevent another shutdown come 15th Feb. and to that end, headway in talks between Republicans and Democrats over the next three weeks is critical,” Mizuho Bank said in a commentary. “While how open both sides are on a border security deal remains in the foreground, it is the U.S.-China trade talks (Wed.-Thu.) that will be in the limelight.”
Talks aimed at resolving the impasse over Chinese technology ambitions and other issues are due to resume in Washington later in the week, led by the U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He. Analysts are forecasting progress in redressing the trade imbalance between the world’s two largest economies, perhaps staving off further hikes in punitive tariffs imposed by both sides, but they expect gaps to remain on key problems such as China’s blueprint for state-led development of leading technologies.
Stocks closed higher Friday, recovering a chunk of their losses from earlier in the week. Technology and industrial companies jumped as companies continued to report solid results for the fourth quarter. The S&P 500 index SPX, -0.78% rose 0.85% to 2,664.76, but the index fell 0.2% for the week after big gains in the previous four. The Dow Jones Industrial Average DJIA, -0.84% added 0.7%, to 24,737.20. The Nasdaq composite COMP, -1.11% surged 1.3% to 7,164.86.
U.S. crude oil CLH9, +0.04% shed 1.6% to $52.80 per barrel in electronic trading on the New York Mercantile Exchange. It rose 1.1 percent to settle at $53.69 per barrel on Friday. Brent crude LCOH9, -2.51% , used to price international oils, gave up 1.7% to $60.58 per barrel. It had gained 0.9 percent on Friday to $61.64 per barrel.
The dollar USDJPY, -0.04% was trading at 109.45 yen down from 109.55 yen on Friday.