Asian Traders Shrug-Off Trade Deal Concerns; Alibaba Listing Boosts Hang Seng; Aussie Shares Up on Rate Cut Hopes

Hong Kong’s Hang Seng Index rose sharply for a second session this week on the hopes of fresh government stimulus and the news that Alibaba will close its order books to institutional investors early for its upcoming secondary listing in Hong Kong. The Australian share market rallied after it was revealed the Reserve Bank gave serious consideration earlier this month to cutting rates for a fourth time this year.
James Hyerczyk
Asia Pacific Markets

The major Asia Pacific stock indexes closed mixed on Tuesday, but mostly higher as investors appeared to shrug off concerns over the progress of U.S.-China trade negotiations. Shares in Hong Kong continued to gain back last week’s losses amid optimism over fresh government stimulus. Aussie shares were supported by the possibility of lower rates after central bank minutes showed policymakers discussed being more accommodative.

Japan’s Nikkei 225 Index settled at 23292.65, down 124.11 or -0.53%. Hong Kong Hang Seng Index finished at 27093.80, up 412.71 or 1.55% and South Korea’s KOSPI Index closed at 2153.24, down 7.45 or -0.34%.

China’s Shanghai Index settled at 2933.99, up 24.79 or +0.85% and Australia’s S&P/ASX 200 Index finished at 6814.20, up 47.40 or +0.70%.

Gains Capped by US-China Trade Worries

Gains in the Asia Pacific indexes were likely capped by overnight developments around U.S.-China trade negotiations. This was also evident on Wall Street where the major indexes reached all-time highs early in the session on Monday, but retreated to the middle of the range into the close.

Investors are reacting to a report from CNBC’s Eunice Yoon, who wrote on Monday, citing a government source, that Beijing is pessimistic about the trade deal. China is concerned after U.S. President Donald Trump said there would be no tariff rollback, Beijing had thought both parties had agreed in principle, Yoon reported.

Official Comments versus Unnamed Government Sources

Although this news may be putting a lid on prices, some are ignoring the headline, and instead remain focused on official comments.

“Our preference remains on putting more weight on comments coming directly from officials dealing with the trade negotiations and on this score there is nothing to contradict the view that the US and China are still working towards striking a deal,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a note.

Hang Seng Up Sharply for Second Session

Hong Kong’s Hang Seng Index rose sharply for a second session this week on the hopes of fresh government stimulus and the news that Alibaba will close its order books to institutional investors early for its upcoming secondary listing in Hong Kong, a sign that demand for shares is strong, two sources with direct knowledge of the matter told CNBC.

The e-commerce giant will close its book at 12 p.m. ET on Tuesday, earlier than initially planned, the sources, who wished to remain anonymous because they are not authorized to speak publicly, said.

“The book is well-covered,” one source said. “The international offering received strong feedback.”

Alibaba got the greenlight from Hong Kong regulators for the secondary listing last week, CNBC previously reported.

RBA Acknowledges Case to Cut Rates

The Australian share market rallied and the Aussie Dollar dipped after it was revealed the Reserve Bank gave serious consideration earlier this month to cutting rates for a fourth time this year.

The share market started flat, but then surged in the late morning, after the RBA released minutes from its November 5 board meeting showing board members acknowledging there was a compelling case for cutting the cash rate to a new record low.

Ultimately they left it unchanged at 0.75 percent but the minutes could be seen as bolstering the odds of a December or February rate cut.

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