Asian markets mixed ahead of US-China trade talks

Asian markets were mixed Wednesday after a healthy run fuelled by hopes for upcoming trade talks between China and the United States, while a double-whammy for Donald Trump also jolted optimism.

While not expecting a major deal when officials from Beijing and Washington meet, investors are hopeful they can find a way out of the months-long row that has seen tariffs imposed on billions of dollars of goods and stock markets tumble.

Recent comments from Commerce Secretary Wilbur Ross signaling he plans to hold off on a final decision on whether to impose duties on auto imports has also provided something to cheer.

Analysts said Asia was due to a breather after recent gains.

Tokyo ended the morning 0.5 percent higher but Hong Kong slipped 0.2 percent and Shanghai was off 0.5 percent while Sydney shed 0.4 percent with political uncertainty in Canberra adding to selling pressure.

Seoul was up 0.3 percent, while Wellington, Taipei, and Manila also edged higher.

However, Wall Street futures fell as the US president’s legal troubles deepened when his long-time personal lawyer Michael Cohen admitted to several charges including illegally using campaign contributions to pay off a porn star and a Playboy model ahead of the 2016 election.

He also said he had been directed to do so “at the direction of a candidate for federal office” and with the aim of influencing the election.

The claim could put Trump in legal jeopardy and throws open the prospect Cohen is about to open up to lawyers for the Russia investigation.

Pound enjoys bounce 

Also Tuesday, the tycoon’s one-time campaign chairman Paul Manafort was convicted on eight counts, including bank fraud, tax fraud and a failure to declare foreign bank accounts.

However, Richard Harris, chief executive officer at Port Shelter Investment Management, said he thought Trump would ride out the current storm.

“I don’t think that what we saw… in terms of Manafort and Cohen are necessarily fatal to the president,” he told Bloomberg TV.

“There are quite a lot of things that could continue and he could still ride them out. It takes an awful lot to impeach a president and it may take an awful lot for Trump not to be elected for a second term.”

On currency markets the dollar continued to stutter after Trump’s negative remarks about Federal Reserve’s interest rate hikes, extending losses against most other units.

The pound was one of the best performers against the greenback, breaking above $1.29 for the first time in almost two weeks after top European Union negotiator Michel Barnier saying officials will now work non-stop on Brexit talks, which were in their final stage.

But Greg McKenna, chief market strategist at AxiTrader, suggested more pain down the road.

“Barnier essentially said if the UK wants a deal they have to abide by EU rules — sounds like Brexit in name only and hard to get through the UK Parliament, surely,” he said in a commentary.

Key figures (around 0230 GMT)

Tokyo – Nikkei 225: UP 0.5 percent at 22,321.14 (break)

Hong Kong – Hang Seng: DOWN 0.2 percent at 27,709.45

Shanghai – Composite: DOWN 0.5 percent at 2,721.46

Euro/dollar: UP at $1.1576 from $1.1569 at 2100 GMT

Pound/dollar: UP at $1.2905 from $1.2895

Dollar/yen: DOWN at 110.17 yen from 110.27 yen

Oil – West Texas Intermediate: UP 92 cents at $67.35 per barrel

Oil – Brent Crude: UP 16 cents at $72.79 per barrel

New York – Dow Jones: UP 0.3 percent at 25,822.29 (close)

London – FTSE 100: DOWN 0.3 percent at 7,565.70 (close)

/vvp