Asian Shares Mixed as Investors Seek Progress in Renewed US-China Trade Negotiations
Asia-Pacific Shares were trading mixed on Tuesday with little follow-through to the upside following Monday’s strong performances. Traders seem to be reacting to the price action on Wall Street from Monday. U.S. equity markets gapped higher, but the buying faded throughout the session. The weak trade was likely fueled by gun-shy traders who were burned when the U.S. and China called off trade talks in early May.
At 05:00 GMT, Japan’s Nikkei 225 Index is trading 21761.60, up 31.63 or +0.15%. Hong Kong’s Hang Seng Index is at 28929.19, up 386.57 or +1.35% and South Korea’s KOSPI is trading 2123.92, down 5.82 or -0.27%.
China’s Shanghai Index is at 3043.01, down 1.89 or -0.06% and Australia’s S&P/ASX 200 is trading 6676.70, up 28.60 or +0.43%.
Reserve Bank Cuts Rates to Historic One-Percent
The Reserve Bank of Australia cut its benchmark interest rate to an historic low of 1 percent. The 25 basis point rate cut follows a move at last month’s meeting and is the first back-to-back cut since 2012, amid fears of a global financial meltdown flowing from European banks.
The decision by the RBA was largely expected, with the market pricing a roughly 80 percent of a cut ahead of the central bank board meeting.
RBA Governor Philip Lowe said after the rate cut announcement, “It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.”
He further added, “The board will continue to monitor developments in the labor market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”
U.S. Chipmakers Big Winners
U.S. chipmaker stocks were the big winners on Wall Street on Monday after President Trump said on Saturday that China will ease its ban on American companies selling products to Chinese communications giant Huawei. In May, the U.S. also barred companies from selling to the firm, causing a steep plunge in chipmaker shares.
According to a report from Goldman Sachs, chipmakers make up the majority of top U.S. companies with revenue exposure to China.
From a performance standpoint, the VanEck Vectors Semiconductor ETF, which includes the top S&P 500 chipmakers, rose 2.7% on Monday. Individually, Skyworks gained 6%, Western Digital was up 4.4%, Micron jumped nearly 4%, and Qualcomm recaptured 2% of recent losses. Broadcom climbed 4.3% and AMD and Nvidia each rose over 1%.
Given the generally weak performance in the major indices after the gap-higher opening, the rise in chipmaker stocks probably prevented an across the board loss for the day.
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