Asia stocks head lower after news that US won't cut more tariffs

People waiting to cross a street in front of a stock indicator displaying share prices of the Tokyo Stock Exchange, on Jan 9, 2020.
People waiting to cross a street in front of a stock indicator displaying share prices of the Tokyo Stock Exchange, on Jan 9, 2020.PHOTO: AFP

TOKYO (REUTERS) - Most Asia stock markets headed lower on Wednesday as investors awaited the signing of an initial US-China trade deal, with sentiment somewhat dented by comments from the US Treasury Secretary that tariffs would remain in place for now.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.13 per cent, Japan's benchmark Nikkei and South Korea's Kospi shed 0.29 per cent and 0.48 per cent, respectively, while Australian stocks added 0.33 per cent.

Treasury Secretary Steven Mnuchin said late Tuesday that the United States would keep in place tariffs on Chinese goods until the completion of a second phase of a US-China trade agreement.

The news came hours before the signing of a preliminary trade agreement to ease an 18-month-old trade war between the world's two largest economies.

Wall Street stocks dipped on Tuesday, reversing earlier intraday record highs, after media reported the United States would likely maintain tariffs on Chinese goods past November's presidential election.

"We should not expect further tariff relief until after the November Presidential elections, suggesting that today's agreement is probably as good as it gets for 2020," said Tapas Strickland, director of economics at National Australia Bank.

US Treasury yields ticked down as investors took stock of weaker-than-expected consumer prices and the expected signing of the interim trade deal, with benchmark 10-year note yield falling to 1.807 per cent.

Markets were also absorbing news the US government is nearing publication of a rule that would vastly expand its powers to block shipments of foreign-made goods to China's Huawei, as it seeks to squeeze the blacklisted telecoms company, two sources said.

In the currency market, the Japanese yen reversed earlier losses against the US dollar as news US tariffs would remain on Chinese goods through the US election hurt risk sentiment.

 
 
 

The yen was last changing hands at 109.95 yen to the dollar, flat on the day, after hitting its weakest in near 8 months of 110.22 yen previous day.

The euro was last traded at US$1.1129, also little changed on the day.

The offshore yuan weakened to 6.899, after rising to 6.865 per dollar, the strongest since July 11, on Tuesday.

The dollar index against a basket of currencies was flat at 97.367

Oil prices edged higher on Tuesday after five days of declines as the United States and China prepared to sign the preliminary trade deal and as Middle East tensions eased.

In early Asian trade on Wednesday, US West Texas Intermediate (WTI) crude slipped 0.1 per cent to US$58.17 per barrel.