Asia report: Markets mixed on lingering hopes for US-China deal

24th Apr 2025 11:10

(Sharecast News) - Asia-Pacific markets ended Thursday on a mixed note as optimism around a potential easing of US-China trade tensions was tempered by diverging regional performances.

The upbeat mood followed gains on Wall Street overnight, buoyed by signals from US president Donald Trump that trade relations with China could improve and that Federal Reserve chair Jerome Powell would remain in his role.

"While yesterday saw a stronger tone in equities due to market relief over Powell's job security and more conciliatory signals regarding China tariffs, this optimism has waned in the Asian session," said TickMill market strategy partner Patrick Munnelly.

"Although the outlook appeared somewhat brighter following partial concessions from Trump, significant uncertainty remains, as highlighted in the Fed's latest Beige Book release.

"Overnight, Trump mentioned that a new tariff rate for China could be announced in the next two to three weeks."

However, Munnelly noted that remarks from US trade secretary Scott Bessent tempered enthusiasm, suggesting a two to three-year timeframe for a comprehensive review of US-China trade issues.

"Additionally, there was some confusion regarding potential tariff reductions or exemptions for certain auto parts."

Markets mixed as hopes for US-China deal linger

In Japan, the Nikkei 225 rose 0.49% to 35,039.15, supported by strong gains in industrial and technology names such as Yaskawa Electric, Nintendo, and Sumitomo Electric Industries.

The broader Topix also advanced, closing up 0.32% at 2,592.56.

Australia's S&P/ASX 200 climbed 0.6% to 7,968.20, led by healthcare and mining stocks, while New Zealand's S&P/NZX 50 added 0.51% to 12,017.84.

China's markets were more subdued - the Shanghai Composite edged up 0.03% to 3,297.29 as several individual stocks hit daily limits.

The Shenzhen Component, however, slipped 0.58% to 9,878.32.

Hong Kong's Hang Seng Index fell 0.74% to 21,909.76, weighed down by declines in tech and consumer shares including JD.com and Meituan.

South Korea's Kospi 100 also eased, retreating 0.18% to 2,505.74, as heavyweights like Posco Daewoo and Samsung SDI retreated.

In currency markets, the dollar was last down 0.66% on the yen, trading at JPY 142.51, while it weakened 0.32% against the Aussie to AUD 1.5672, and lost 0.48% against the Kiwi, changing hands at NZD 1.6740.

Oil prices were mixed, with Brent crude futures last down 0.02% on ICE to $66.11 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.08% to $62.32.

Korean economy contracts in first quarter

On the data front, South Korea's economy contracted for the first time in over three years, with gross domestic product shrinking 0.1% year-on-year in the first quarter of 2025, according to preliminary data from the Bank of Korea.

The decline, driven primarily by a steep 12.4% drop in construction activity, missed market expectations for modest growth and reversed the 1.2% expansion recorded in the previous quarter.

On a quarterly basis, GDP fell 0.2%, compared to a 0.1% rise in the final quarter of 2024.

The weaker-than-expected data added pressure on policymakers to act, with ANZ forecasting two to three additional interest rate cuts by year-end.

ANZ Asia economist Krystal Tan noted the broad-based nature of the slowdown, citing declines in private consumption, government spending, investment, and trade.

She was expecting total fiscal stimulus this year to exceed 1% of GDP, according to CNBC, as authorities responded to a deteriorating growth outlook that predates the full impact of recently imposed US tariffs.

Reporting by Josh White for Sharecast.com.