Asian Shares Mostly Higher; Hang Seng Jumps on Stimulus Expectations

The major Asia Pacific stock indexes finished mostly higher on Monday with Hong Kong shares posting a strong comeback after last week’s sharply lower trade. Shares eased higher as optimism grew over a U.S.-China trade deal following a report of “constructive talks” over the weekend.

Chinese state media Xinhua reported Washington and Beijing had a high-level phone call on Saturday and that the two sides discussed each other’s core issues for the first phase of an initial trade agreement.

This news supported the comments from two high-ranking U.S. officials last Thursday and Friday that backed the notion that the two economic powerhouses were close to completing a deal.

On Monday, Japan’s Nikkei 225 Index settled at 23416.76, up 113.44 or +0.49%. Hong Kong’s Hang Seng Index finished at 26681.09, up 354.43 or +1.35% and South Korea’s KOSPI Index closed at 2160.69, down 1.49 or -0.07%.

China’s Shanghai Index settled at 2909.20, up 17.86 or +0.62% and Australia’s S&P/ASX 200 index finished at 6766.80, down 26.90 or -0.40%.

Hong Kong Rises on Stimulus Expectations

Hong Kong stocks closed higher on Monday, following steep losses the previous week, as lackluster economic data stoked hopes of fresh stimulus measures to revive flagging growth in the Asian financial hub.

Government data confirmed on Friday that Hong Kong has sunk into recession for the first time in a decade in the third quarter, weighed down by increasingly violent anti-government protests and the U.S.-China trade dispute.

“Ending violence and restoring calm are pivotal to the recovery of the economy. The government will continue to closely monitor the situation and introduce measures as necessary to support enterprises and safeguard,” the government said.

China Makes Surprise Rate Cut

Sentiment in Asia got a lift after China’s central bank unexpectedly trimmed a closely watched lending rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth.

Trade Deal Optimism – Where’s the Beef?

The markets were propped up by optimism over a possible U.S.-China trade deal, however, most investors were still awaiting concrete signs of progress in the trade talks.

Doubts about the trade talks emerged early last week, although optimism gradually returned as U.S. officials sounded more positive. Neither side, however, provided concrete details about their negotiations.

Aussie Shares Dip on Low Volume

Trading volumes on the Australian stock market were the lowest since early October, contributing to the weakness in the S&P/ASX 200 Index. However, there were some wild swings in stock prices for companies making major news announcements.

Overall, it was a subdued day for Australia with trading volumes of 436 million shares and two thirds of the index closing lower.