Chinese stocks followed other Asian markets in having a muted reaction to news that China and the U.S. announced they were finally set to sign off on a phase one trade agreement.
The Shanghai composite was flat in early trade and the Shenzhen component gained 0.32%. The Shenzhen composite was up 0.29%. Hong Kong’s Hang Seng index was down 0.12%.
Australia’s S&P/ASX 200 was the outlier in Asian stocks, jumping 1.24%, led by banks and major miners.
Japan’s Nikkei 225 was down 0.11% after a strong rally on Friday, while the Topix was flat. Autos fell, reversing gains they made last week on the back of Brexit optimism.
Over in South Korea, the Kospi rose 0.11%.
Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.27%.
U.S. Trade Representative Robert Lighthizer said on Sunday that the phase one U.S.-China trade deal reached on Friday is “totally done,” and it will nearly double U.S. exports to China over the next two years.
U.S. and Chinese officials announced on Friday that the countries had reached a phase one agreement after a contentious 18-month trade war. China agreed to billions of dollars in agricultural purchases from the U.S., while U.S. President Donald Trump vowed to not pursue a new round of tariffs that had been scheduled for Sunday. The two major economies plan to sign the partial accord in the first week of January.
U.S. stocks didn’t move much by the Friday close after those trade developments. The Dow Jones Industrial Average ended the day just 3.33 points higher at 28,135.38. The S&P 500 closed just above the flatline at 3,168.80 while the Nasdaq Composite gained 0.2% to 8,734.88.
Analysts advised caution on the upbeat trade news.
John Bromhead, foreign exchange strategist at ANZ Research, said: “The US and China reach another trade agreement but markets are quick to question the level of positivity emanating from the announcement.”
“The announcement is a step in the right direction for the two nations, but does not completely reduce the chances of trade disputes between the two nations in the year,” he said, adding that there have been no indications from the U.S. that there will be a further rollback in tariffs in the future.
“A trade disaster averted, but nowhere in the vicinity of a global trade break-through that ‘lifts all boats’; in fact, not even trade uncertainty is completely lifted,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note. “The wider point is that a lot of work is left to be done on US-China relations.”
Meanwhile, China’s industrial production data and retail sales are set to be released on Monday.
Apple suppliers
Apple led Friday’s slight gains, rising 1.4% to a record after news of the trade agreement was announced. Some of the tariffs set to take effect Sunday would have impacted some of Apple’s key products, including the iPhone.
Over in Asia, shares of Apple suppliers were watched for any optimism on that development.
Taiwan’s Hon Hai Precision Industry, better known as Foxconn and Apple’s largest manufacturer, was up 0.88%, while Pegatron leaped 1.45%. Over in Hong Kong, Sunny Optical jumped 1.68%, while AAC Tech bounded 1.66%.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.122 after seeing highs above the 97.7 level last week.
The Japanese yen traded at 109.35 against the dollar, weakening from 109.27 the day before. The Australian dollar changed hands at $0.6878, weakening from levels above $0.693.
Oil prices declined in morning trade during Asian hours: Global benchmark Brent fell 0.28% to $65.04 per barrel while U.S. crude was down 0.30% at $59.89.
Here’s the economic calendar for Monday (all times in HK/SIN):
10:00 a.m.: China industrial production, retail sales
— CNBC’s Emma Newburger contributed to this report.
