Asian Stocks Edge Higher In Thin Holiday Trading: Markets Wrap

Shipping stocks in Japan and South Korea such as Kawasaki Kisen Kaisha Ltd. and HMM Co. jumped. (Photo source: Bloomberg)

Asian stocks notched up small gains as investors largely adopted a wait-and-watch approach on tariff negotiations before taking long-term bets.

While the Nikkei-225 gauge in Japan advanced 1%, shares in mainland China dipped 0.3% after the US took steps to impose levies on Chinese vessels docking at its ports. The New Zealand dollar extended a decline from a five-month high. Most of the other markets in the region are shut for the Good Friday holiday.

Traders are focused more on developments in country-specific discussions, seeking clues on how the tariffs will pan out. After the “big progress” in the Japan-US talks, President Donald Trump said he's “very confident” of a deal with the European Union, without giving further details. Questions surround the status of talks after Beijing indicated Wednesday it has several conditions for agreeing to talks with the administration.

“Trump was not negative on trade negotiations with the EU,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co. “The Japan-US negotiations that ended yesterday were also a good first round with no disturbance as currency exchange was not on the agenda.”

The yen was little changed Friday after weakening in the prior session as Japan's top negotiator said currencies weren't discussed in the bilateral meeting. That allayed concerns a stronger exchange rate would be part of the US demands.

While Trump didn't offer details of any agreement with the EU, he was decisive on a critical US-Ukraine minerals accord, saying a deal would be signed next week. The president also said he was reluctant to continue ratcheting up tariffs on China because it could stall trade between the two countries, and insisted Beijing had repeatedly reached out in a bid to broker a deal.

Still, the administration took steps to impose levies on Chinese vessels docking at US ports, threatening to shake up global shipping routes and escalate the trade war between the world's two biggest economies.

Shipping stocks in Japan and South Korea such as Kawasaki Kisen Kaisha Ltd. and HMM Co. jumped.

Trump's tariff deluge has prompted some Chinese clients to reduce their Treasuries holdings in favor of European debt, according to Deutsche Bank AG. European high-quality bonds, Japanese government bonds and gold are likely to be the potential choices for investors as alternatives to Treasuries, said Lillian Tao, head of the bank's macro and global emerging market sales.

Meanwhile, China's sovereign wealth fund appears to have stepped in to shore up stocks this week as escalating trade tensions rattle investors. Exchange-traded funds known to be favored by China's so-called national team saw a surge in turnover in the final 20 minutes of the session in the past three days.

Contemporary Amperex Technology Co.'s shares fell Friday after a US congressional committee called on two American banks to withdraw from working on the Chinese battery maker's planned initial public offering in Hong Kong.

Elsewhere in Japan, consumer inflation advanced apace last month, supporting the central bank's stance on a gradual rate-hike path. The price of rice, the nation's staple food, rose 92.1% from a year earlier, the fastest pace in data going back to 1971.

US equities posted a weekly loss amid disappointment over Federal Reserve Chair Jerome Powell's push back on the idea of the central bank supporting markets. Trump criticized Powell on social media, saying the Fed Chair's termination from his post can't come quickly enough, arguing that the central bank should have cut interest rates already this year. Trump later told reporters he could force Powell out if he wanted to.