Asian shares fall back following Trump's meeting with Chinese leader Xi

Asian shares initially retreated on Thursday after President Donald Trump's meeting with Chinese leader Xi Jinping.

 

While Trump said the meeting was amazing and had resolved many issues, investors appeared sceptical. US futures were flat.

 

Tokyo's Nikkei 225 index bounced lower and then inched up less than 0.1 per cent to 51,333.51 after the Bank of Japan kept its benchmark interest rate unchanged.

 

Chinese markets gave up early gains, with Hong Kong's Hang Seng shedding 0.2 per cent to 26,298.64. The Shanghai Composite index lost 0.3 per cent to 4,006.60.

 

South Korea's Kospi index broke through the 4,000 mark for the first time, edging up 0.1 per cent to 4,084.91 after climbing more than 1 per cent earlier in the day following reports of progress in Washington's trade talks with South Korea. Solid corporate earnings also boosted shares in tech, auto and shipbuilding.

 

In Chinese markets, Hong Kong's Hang Seng index rose 0.8 per cent to 26,555.36 while the Shanghai Composite index added less than 0.1 per cent to 4,017.95. The Hong Kong Monetary Authority (HKMA) on Thursday cut its base rate by 25 basis points to 4.25 per cent. It always follows the US lead in interest rate policies since the value of Hong Kong's currency is linked to the US dollar. 

"The BOJ is tip-toeing towards a hike," said Fred Neumann, chief Asia economist at HSBC in Hong Kong. "With October a missed opportunity to nudge rates higher, all eyes are now on December, when a rate hike appears likely."

 

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The Nikkei 225 fluctuated between gains and losses and was last 0.2 per cent higher after the Bank of Japan's decision. Though it stood pat on rates, it repeated its pledge to continue increasing borrowing costs if the economy moves in line with its projections.

The yen reversed its earlier gains against the US dollar and was last 0.2 per cent weaker at 153.065 yen. BOJ Governor Kazuo Ueda will hold a press conference later today.

US President Donald Trump is currently meeting Chinese leader Xi Jinping in South Korea. US negotiators have signalled they seek a return to a fragile trade war truce, but tensions remain high and longer-term economic irritants will likely persist between the geopolitical rivals.

The Federal Reserve cut interest rates on Wednesday by a quarter of a percentage point as expected, but the US central bank's new policy statement included several references to the lack of official data during the ongoing federal government shutdown, and Fed Chair Jerome Powell told reporters later that policymakers are likely to become more cautious if it deprives them of further job and inflation reports. 

 

Australia's S&P/ASX 200 shed more than 0.5 per cent to 8,885.50, pulled lower by losses in real estate and consumer discretionary stocks.

 

Taiwan's Taiex dropped 0.1 per cent while India's BSE Sensex shed 0.5 per cent.

 

Trump told reporters he was cutting average tariffs on Chinese goods to 47 per cent from 57 per cent, effective immediately after his first face-to-face meeting with Chinese leader Xi Jinping in six years. He cited progress by Beijing in curbing exports of fentanyl and the chemicals used to make it.

 

Trump also said China was keeping its policy of tighter restrictions on exports of rare earths and related technologies on hold for a year, and he expects that agreement to be extended. The aggressive use of tariffs since returning to the White House for a second term, combined with China's retaliatory limits on exports of rare earth elements, has given the meeting newfound urgency.

 

There was no immediate word on details of the talks from the Chinese side.

 

The encounter was a chance for the leaders of the world's two largest economies to stabilise relations after months of turmoil over trade issues.

 

On Wednesday, US stocks bounced around their records after the Federal Reserve made moves to boost the job market but also warned that more help isn't guaranteed. 

 

The S&P 500 finished virtually flat and edged down by less than 0.1 per cent. The Dow Jones Industrial Average dipped 73 points, or 0.2 per cent, and the Nasdaq composite rose 0.5 per cent. All three indices were coming off an all-time high.

 

Stocks had been on track for modest gains in the afternoon after the Fed cut its main interest rate for the second time this year in hopes of helping the slowing job market. But the market snapped lower after Chair Jerome Powell later warned that it is not a foregone conclusion that the Fed will cut again in December at its next meeting, far from it.

 

That needs to be taken off the board, Powell said.

 

In the meantime, the deluge of big US companies reporting how much profit they made during the summer, and the frenzy in artificial-intelligence technology, is driving growth. The pressure is on companies to deliver gains because that's one way they can quiet criticism that their stock prices have shot too high.

 

In other dealings early Thursday, the benchmark US crude shed 24 cents to $60.24 per barrel. Brent crude, the international standard, lost 22 cents to $64.10 per barrel.

 

The US dollar rose to 152.94 Japanese yen from 152.65 yen. The euro edged up to $1.1627 from $1.1609.