Global stock rally pauses as Asia falls on lack of details from concluded US-China talks

MSCI's broadest index of Asia-Pacific shares outside Japan was a tad lower, trading not far off a near four-week high.
MSCI's broadest index of Asia-Pacific shares outside Japan was a tad lower, trading not far off a near four-week high.PHOTO: REUTERS

SYDNEY (BLOOMBERG) - The post-Christmas rally in global equities stalled on Thursday (Jan 10) in Asia as investors took a step back in the absence of any concrete details on trade negotiations.

The steepest declines were in Japan. S&P 500 Index futures retreated as while the US and China laid the ground for resolving trade issues, negotiations seem likely to continue indefinitely. Shares fell in South Korea and Hong Kong, and fluctuated in Shanghai. The offshore yuan stayed at the strongest since August.

Japan's Topix index fell 1.2 per cent as of 11:55am in Tokyo. The MSCI Asia Pacific Index slid 0.5 per cent following five days of gains.

S&P 500 futures declined 0.5 per cent lower. The S&P 500 rose overnight by 0.4 per cent.

US stocks posted a fourth day of gains as Fed minutes revealed policy makers took a more cautious approach to further interest-rate increases, chiming with Chairman Jerome Powell's tone from last week. Still, advances were limited amid concern the partial government shutdown will continue for some time.

Global stocks had been rallying amid optimism tensions are thawing between the US and China on trade, though the most recent meetings have ended with few details. The Fed minutes indicated policy makers took a more cautious approach to further rate increases than their initial statement following the December meeting.

"Volatility is here to stay but you use volatility to your advantage to take some chips off the table when you start to see a bit of a rebound in the market," Nathan Thooft, head of global asset allocation at Manulife Asset Management, told Bloomberg TV in Hong Kong.

Meanwhile, the US government shutdown is dragging on. US President Donald Trump said his party was "very unified" behind his plan to keep the government closed until he gets funding to build a wall along the Mexican border, which is at the center of the dispute. He then walked out of a meeting with Democratic congressional leaders Nancy Pelosi and Charles Schumer, calling it a "total waste of time."

The US dollar was steady and crude pulled back after climbing above US$52 a barrel and entering a bull market. West Texas Intermediate crude slipped 0.9 per cent to US$51.87 a barrel, after surging 5.2 per cent to the highest in a month.