Trade Optimism Powers Positive Asia Readings

Major Asia Pacific markets were in positive territory by Monday afternoon, as the U.S. and China appeared close to finalizing a "phase one" trade deal.

In Tokyo, the Nikkei 225 index gained 67.46 points, or 0.3%, to 22,867.27.

The Japanese yen traded at 108.70, strengthening from 108.79 seen earlier.

In Hong Kong, the Hang Seng Index rebounded 223.87 points, or 0.8%, to 26,891.26.

Europe’s largest lender HSBC reported third-quarter pre-tax profits that fell 18% year-on-year to $4.8 billion in the quarter that ended September. Still, the bank said its before-tax profit in Asia climbed 4% from last year, noting a "resilient performance in Hong Kong."

HSBC earns most of its profits from Hong Kong, which has been hit by unrest for months. The city accounted for more than half the bank’s pre-tax profits in the first half of this year. HSBC shares tumbled 2.76% in the afternoon.

Hong Kong-based insurer AIA, which also posted results on Monday, said in a statement it has already been affected by a "challenging operating environment, particularly in relation to current events in Hong Kong." Its value of new business, which tracks expected profits from new premiums, was up 1% to $980 million in the three months to September 30.

Its stock surged 3.61% by the afternoon.

The city’s Financial Secretary Paul Chan said in a blog post on Sunday, according to a Reuters report, that Hong Kong is now in recession and it is "extremely difficult" to achieve the government’s original forecast of 0% to 1% annual growth made before the protests.

In Australia, major miners gained by the close: Rio Tinto trimmed some earlier gains to trade up 0.5%, Fortescue Metals jumped 2.2%, while BHP Billiton rose 1.1%.

The Australian dollar changed hands at $0.6817, following a low of $0.6808 seen earlier.


In Shanghai, the CSI 300 added 29.79 points, or 0.8%, to 3,926.58

On the U.S.-China trade front, the Office of the U.S. Trade Representative said Friday the countries have "made headway on specific issues and the two sides are close to finalizing some sections of the agreement."

On Saturday, China’s Commerce Ministry said both sides have agreed to properly address core issues. The ministry said in a statement both sides have confirmed that the U.S. will import cooked poultry from China, while Beijing will lift a ban on U.S. poultry.

The offshore yuan strengthened to 7.0570 against the dollar on Monday afternoon, from a high of 7.0768 last week before those developments. The onshore yuan was at 7.0584, from a high of 7.0863 last week.

Meanwhile, the trade war continued to take its toll on China, with profits at the country’s industrial sector falling 5.3% in September year-on-year, according to data from the National Bureau of Statistics on Sunday.

In other markets

Markets in New Zealand and Singapore were shuttered for holiday

In Taiwan, the Taiex regained 18.9 points, or 0.2%, to 11,315.53

In Korea, the Kospi gained 5.71 points, or 0.3%, to 2,093.60

In Australia, the ASX 200 nosed up 1.49 points to 6,740.71