Asia shares pare gains as focus turns to crucial Sino-US trade talks

Tuesday, 29 January 2019 02:29 - - {{hitsCtrl.values.hits}}

Reuters. A man is reflected on an electronic board showing a graph analyzing recent

TOKYO (REUTERS): Asian shares ticked up on Monday though they retreated from earlier highs as relief on news of a deal to reopen the US Government following a prolonged shutdown gave way to edginess before a key round of Sino-US trade talks.

European shares are expected to dip at their open, with spread-betters looking to a fall of 0.3% in London’s FTSE and a 0.4% drop in Frankfurt’s DAX and Paris’s CAC.

E-Mini futures for the S&P 500 were last down 0.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan was almost flat, pulling back after hitting its highest since Oct. 4 early in the session.

China’s benchmark Shanghai Composite and Hong Kong’s Hang Seng lost almost 0.2% while South Korea’s KOSPI was largely flat.

Japan’s Nikkei closed 0.6% lower while Australian financial markets were shut for their ‘Australia Day’ holiday.

Facing mounting pressure, US President Donald Trump agreed on Friday to temporarily end a 35-day-old partial US government shutdown without getting the $5.7 billion he had demanded from Congress for a border wall.

In response Wall Street rallied broadly on Friday as investors were relieved to see an end to one of the longest US government shutdown in history.

The shutdown had left the markets anxious as it came at a time of heightened worries over slowing global growth, signs of stress in corporate earnings and a still unresolved Sino-US trade war.

Attention now shifts to Chinese Vice Premier Liu He’s visit the United States on Jan. 30-31 for the next round of trade negotiations with Washington.

The high-level talks in Washington will include discussions about China’s currency practices, US Treasury Secretary Steven Mnuchin said. He has criticised the yuan’s weakness in the past, but in recent days, positive sentiment towards the talks has lifted the yuan’s value against the dollar.

In the currency market, the pound hovered not far off a three-month high of $1.3218 set on Friday on the back of optimism that Britain can avoid a no-deal Brexit.

Britain is set to leave the European Union on 29 March, but the country’s members of parliament remain far from agreeing a divorce deal and longer term prospects for sterling remained far from clear.

The immediate focus was on Tuesday, when the British parliament will debate and vote on Prime Minister Theresa May’s Brexit “plan B”.

The euro was also on the front foot against the sagging dollar, which was on the defensive as the Federal Reserve convenes its first policy meeting of 2019 where it is expected to leave interest rates unchanged after raising them five times in as many quarters in December.

The attention will be on the policy outlook as the Fed has signalled a slower pace of rate increases this year with markets speculating it might pause its tightening cycle soon.

The single currency was a shade higher at $1.1410 after gaining 0.9% on Friday, paring the losses from earlier last week on dovish-sounding comments by European Central Bank President Mario Draghi.

Against the Japanese yen, the greenback slipped 0.2% to 109.31 yen, extending mild losses at the end of last week.

The yield on benchmark 10-year Treasury notes edged down to 2.740% compared with its US close of 2.751% on Friday.