Asian shares rebound from 12-month lows, on news of US-China trade talks

Tokyo — Asian shares pulled away from one-year lows on Thursday, after Beijing said it would hold trade talks with Washington in August, although Turkey’s currency crisis and fears of an economic slowdown in China kept most markets in the red.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.3% lower, after shedding as much as 1.1% to hit its lowest in just over a year.

China on Thursday said a delegation led by its vice-commerce minister would travel to the US for talks in late August at the invitation of Washington.

That helped Chinese stocks pare losses, with the Shanghai composite index and Hong Kong’s Hang Seng index both down 0.4%, having earlier fallen as much as 1.9% and 1.7%, respectively.

Japan’s Nikkei swung into positive territory, up 0.2% on the day, but was down as much as 1.5% in morning trade.

The euro rose 0.3% and the offshore Chinese yuan gained 0.4% following the news on China. US stock futures rose 0.3%.

The announcement by the Chinese commerce ministry of the planned meeting in late August comes after a lull in talks between the two sides. The last official round of talks was in early June when US commerce secretary Wilbur Ross met Chinese Vice-Premier Liu He in Beijing.

Despite the modest reprieve, markets remain vulnerable as signs of a slowdown in the Chinese economy and Turkey’s volatile currency keep investors on guard.

Wall Street’s major indices closed lower on Wednesday, with the S&P 500 down 0.8%, its biggest percentage drop since late June, amid disappointing earnings and escalating global trade worries.

“Negative news coming from Turkey and China every day is upsetting global markets,” said Norihiro Fujito, senior market strategist at Mitsubishi UFJ Morgan Stanley Securities.

“Also, Tencent’s earnings shock hurt tech stocks, sending the tech-heavy Nasdaq lower. It reminded investors that the US-China trade spat is starting to harm the health of even the tech firms, which had been a major driver of the US share rally.”

Tencent reported its first quarterly profit fall in nearly 13 years on Wednesday, as a result of weak gaming revenue. That knocked other Asian tech firms, with South Korea’s Samsung Electronics down to a one-year low.

Oil prices took an additional hit after data showed a surprise weekly increase in US crude stockpiles, compounding worries about a weaker global economic growth outlook before bouncing back on the trade talk news.

US crude oil last stood at $65.06 a barrel, after having fallen to two-month lows of $64.42 a barrel, following Wednesday’s 3.2% fall.

Reuters