Asia report: Most markets higher as Trump extends olive branch to ZTE

Most markets in Asia were higher on Monday, as oil prices continued to fall back from their three-year highs seen last week.

In Japan, the Nikkei 225 was up 0.47% at 22,865.86, as the yen weakened 0.08% against the yen to last trade at JPY 109.48.

The broader Topix added 0.61% in Tokyo, with the real estate sector leading the pack as it rose 3.1%, although miners were down.

On the mainland, the Shanghai Composite was 0.34% higher at 3,174.14, and the smaller, technology-heavy Shenzhen Composite lost 0.1% to 1,823.25.

South Korea’s Kospi slipped 0.06% to 2,476.11, while the Hang Seng Index in Hong Kong surged 1.35% to settle at 31,541.08.

Technology behemoth Samsung Electronics dragged the wider market down in Seoul, as it fell 2.34%.

The ongoing geopolitical tension between Washington and Beijing was back at the top of the agenda on Monday, after US President Donald Trump tweeted his support for a beleaguered Chinese technology firm on Sunday.

Trump said he was working with his Chinese counterpart Xi Jinping to help ZTE - which makes telecoms equipment and mobile devices - “get back into business, fast”.

ZTE was crippled following a ruling from the US Department of Commerce earlier this year, banning US companies from supplying ZTE after it was found to have illegally sent products to Iran.

Chinese smartphone makers such as ZTE still rely on American-designed chips from the likes of Qualcomm and Intel in the manufacture of their products.

The move from Trump was read by many market watchers as a concession from the US ahead of the second round of US-China trade negotiations later in the week.

“While some might be unsettled at prospects of trade confrontation, we would argue that the US is acting as a rational actor,” noted Mizuho Bank strategist Chang Wei Liang.

“And rational US behaviour would almost certainly mean that the administration would not choose a mutually destructive trade outcome.”

Oil prices were lower for much of the session, though they still remained close to the three-year highs seen after Trump confirmed he was pulling the US out of the Iran nuclear deal early last week.

Prices picked up as the region went to bed, however, with Brent crude last up 0.14% at $77.23 per barrel and West Texas Intermediate rising 0.03% to $70.72.

In Australia, the S&P/ASX 200 ended the day up 0.31% at 6,135.30, led higher by the energy and materials subindices.

Commonwealth Bank of Australia shares reversed their early losses to finish 0.38% above the waterline, after its chief financial officer Rob Jesudason resigned with immediate effect.

He was replaced by Alan Docherty in an acting capacity, with the resignation coming amid an ongoing Royal Commission of Inquiry into Australia’s financial sector.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was ahead 0.4% at 8,713.23, led higher by infant food and dairy products exporter A2 Milk, which rose 2.6%.

A2 was widely tipped by local analysts to be entering the MSCI New Zealand Index upon its review, due late Monday London time.

A2 Milk would likely replace either ailing construction conglomerate Fletcher Building or energy supplier Mercury.

It was a mixed picture for the down under dollars, with the Aussie last 0.17% stronger on the greenback at AUD 1.3239, while the Kiwi weakened 0.18% to NZD 1.4386.