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James Hyerczyk
Central, Hong Kong 16 July 2019:Two buffalo statues, Exchange Square at Hong Kong Island

The major Asia Pacific stock indexes finished mostly higher on Wednesday. Trading ranges were tight because of low volume and concerns over the lack of details in U.S.-China trade negotiations. Additionally, investors are becoming increasingly nervous as the threat of increased tariffs looms. China wants the U.S. to rollback previous tariffs, but so far, President Trump has balked at the idea. Meanwhile, investors fear the U.S. will raise tariffs as scheduled on December 15.

On Wednesday, Japan’s Nikkei 225 Index settled at 23437.77, up 64.45 or +0.28%. Hong Kong’s Hang Seng Index closed at 26854.00, up 40.08 or +0.15% and South Korea’s KOSPI Index settled at 2127.85, up 6.50 or +0.31%.

In China, the Shanghai Index settled at 2903.19, down 3.87 or 0.13%. Australia’s S&P/ASX 200 finished at 6850.60, up 63.10 or +0.93%.

US-China Recap

Comments on the status of the U.S.-China trade talks have been scarce this week, making investors a little nervous, but not like last week when worries drove investors out of the risky assets and into the safe-havens for safety.

So far, this week’s narrative said that leading negotiators from Washington and Beijing held another phone call on Tuesday morning to discuss how to “resolve core issues,” China’s Ministry of Commerce said.

China’s Ministry of Commerce said in an online statement, “Both sides discussed resolving core issues of common concern, reached consensus on how to resolve related problems (and) agreed to stay in contact over remaining issues for a phase one agreement,” the Chinese-language statement said, according to a CNBC translation.


Trump Remains Optimistic

President Donald Trump on Friday said on the television program “Fox and Friends” that a long-negotiated trade deal with China is “potentially very close.”

On Tuesday, Trump said the United States was in the “final throes” in its attempt to reach a trade deal with China, but that at the same time Washington stands with protesters in Hong Kong, where it wants to see democracy.

Trade Talk Worries

Last week, negative headlines dominated the news, leading to some light profit-taking in the stock market. This week, there haven’t been any negative comments, and the rally to record highs in the U.S. has resumed. However, there are some whispers over the lack of concrete evidence that progress is being made in the trade talks.

Robert Carnell, chief economist and head of research for Asia Pacific at ING is one of those worried. He wrote in a note that markets “seem to be enured” to comments such as those from Trump.

“The fact that we have heard these positive comments so often but are still waiting for a deal could be interpreted as meaning that significant problems still remain,” Carnell said. “This may be more than just dotting the ‘I’s’ and crossing the ‘t’s.”

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