Asia Mostly Rises as Trade Tensions Increase

Major Asia Pacific markets rose by the close on Friday, as investors looked ahead to an important speech from U.S. Federal Reserve Chairman Jerome Powell later in the day.

In Tokyo, the Nikkei 225 index gained 82.9 points, or 0.4%, to end the week at 20,710.91

Elsewhere, the Japanese yen traded at 106.64 versus the U.S. dollar, weakening fractionally from an earlier level around 106.36

In Hong Kong, the Hang Seng Index rocketed 130.61 points, or 0.5%, to 26,179.33

Tensions between the two countries escalated on Thursday after Seoul said it was cancelling an intelligence-sharing pact with Tokyo amid a bitter trade dispute. The arrangement was designed to share information on the threat posed by North Korea and its missile and nuclear activities.

Japan’s Defense Minister Takeshi Iwaya said Friday South Korea’s decision showed it failed to appreciate the growing security threat posed by Pyongyang’s missile activities.

Defense names in Japan and South Korea mostly rose steadily through the day to end higher by the close. In Japan, shares of Kawasaki Heavy Industries rose 0.7%, Fujitsu was up 1.25% and Mitsubishi Electric added 1.6%. South Korean defense stocks pared early gains but were mostly positive: Speco was up 0.2%, Victek jumped 8.49% in early trade, and Hanwha Aerospace gained about 2%.

The South Korean won weakened further to 1,209.64 against the greenback, from around the 1,202 level reached midweek.

The Australian dollar changed hands at $0.6754.

CHINA

In Shanghai, the CSI 300 added 27.35 points, or 0.7%, to 3,820.86

The onshore yuan dipped to a fresh low since 2008, trading at 7.0930 per dollar in the afternoon, while the offshore exchange rate was at 7.0902. Earlier, before the Chinese markets opened, the People’s Bank of China set the yuan mid-point rate at 7.0572 per dollar, slightly stronger than what an economist poll had estimated.

The central bank allows the on-shore yuan to trade in a narrow band of 2% up or down from the daily midpoint fix.

Investor sentiment remained cautious as the trade war between Beijing and Washington continues. On Thursday, China threatened ‘countermeasures’ against new U.S. tariffs on Chinese goods, but did not provide details on how it will respond.

In other markets

In Korea, the Kospi index slipped 2.71 points, or 0.1%, to 1,948.30

In Taiwan, the Taiex gained 8.33 points, or 0.1%, to 10,538.11

In Singapore, the Straits Times Index shed 17.39 points, or 0.6%, to 3,110.35

In New Zealand, the NZX 50 slid 102.86 points, or 1%, to 10,622.35

In Australia, the ASX 200 climbed 21.33 points, or 0.3%, to 6,523.13