Asian shares fell back Monday from early gains as caution over looming trade talks between Washington and Beijing displaced relief over the end of the partial U.S. government shutdown.
KEEPING SCORE: Japan’s Nikkei 225 stock index sank 0.6 percent to 20,649.00. Hong Kong’s Hang Seng index was flat at 27,562.20 and the Shanghai Composite index edged 0.1 percent lower to 2,597.25. The Kospi in South Korea edged 0.1 percent higher to 2,181.08 while India’s Sensex plunged 0.9 percent to 35,702.51. Markets in Taiwan and Southeast Asia were mostly higher. Australia’s markets were closed for a national holiday.
TRADE TALKS LOOM: 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 say there might be moves to trim China‘s massive trade surplus with the U.S. that could stave off further hikes in punitive tariffs imposed by both sides. However, they expect gaps to remain on key problems such as China’s blueprint for state-led development of leading technologies.
U.S. GOVERNMENT RE-OPENS: 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.”
ANALYSTS’ VIEWPOINT: “So the US government being ‘open’ again is a relief. But the greater challenge ahead is to prevent another shut-down 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.”
JAPAN-ECONOMY: Shares fell in Tokyo as the parliament convened and Prime Minister Shinzo Abe laid out plans to cope with adverse factors such as a sales tax hike due in October and longer-term demographic trends. Finance Minister Taro Aso pledged to use “every policy tool at our disposal” as he sought support for a budget that includes 2 trillion yen ($18 billion) in stimulus to counter an Oct. 1 increase in the sales tax to 10 percent from the current 8 percent.
WALL STREET: 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 rose 0.85 percent to 2,664.76, but the index fell 0.2 percent for the week after big gains in the previous four. The Dow Jones Industrial Average added 0.7 percent, to 24,737.20. The Nasdaq composite surged 1.3 percent to 7,164.86 while the Russell 2000 index of smaller company stocks also increased 1.3 percent, to 1,482.85.
ENERGY: U.S. crude oil shed 62 cents to $53.07 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, used to price international oils, gave up 62 cents to $61.02 per barrel. It had gained 0.9 percent on Friday to $61.64 per barrel.
CURRENCIES: The dollar was trading at 109.32 yen, down from 109.55 yen on Friday. The euro strengthened to $1.1411 from $1.1409.