World Markets

Asia Shares Mixed as Muted Reaction to Jobs Report Gives Way to Renewed Trade Talks

The major Asia Pacific stock indexes finished mixed on Monday as investors shifted their focus away from the U.S. economy and on to the renewed U.S.-China trade negotiations that begin later this week after talks collapsed five months ago. Ahead of the talks gains were capped after Bloomberg reported that Chinese officials are growing hesitant to pursue a broad deal with the United States.

On Monday, Japan’s Nikkei 225 Index settled at 21375.25, down 34.95 or -0.16%. South Korea’s KOSPI Index closed at 2121.73, up 1.04 or -0.05% and Australia’s S&P/ASX 200 finished at 6563.60, up 46.50 or 0.71%.

The markets were closed in China and Hong Kong. In Australia, parts of the country were closed for the Labor Day holiday.

Traders Digest US Non-Farm Payrolls

Traders had a muted reaction to the U.S. Non-Farm Payrolls report that was released on Friday after the Asian market close.

The report was called “solid” because it showed that underlying economic momentum in the U.S. remains strong.

Non-Farm Payrolls rose by 136,000, missing the 145,000 forecast. This disappointment, however, was offset by the news that unemployment hit a fresh 50-year low in September.

The good news is the jobs report helped erase some of the bearishness surrounding the U.S. economy after weaker-than-expected manufacturing and non-manufacturing PMI last week helped fan the flames of recession. Instead, investors now see the U.S. economy as weakening rather than rapidly deteriorating.

Furthermore, the labor news helped dampen the chances of a rate cut by the Federal Reserve later in the month. The markets are still pricing in at least two rate cuts before the end of the year, however, Fed Chairman Jerome Powell wasn’t as certain. Powell described the U.S. economy on Friday as being solid, noting the central bank must do what it can to keep it there.

China May Push for Short-Term Trade Agreement

A little more than two weeks ago, President Trump said he didn’t want a “partial deal” with Beijing, moving away from his suggestion in early September that he would consider an “interim deal.”

“We’re looking for a complete deal. I’m not looking for a partial deal,” Trump said.

Trump is looking for a deal that addresses intellectual property theft, forced transfer of technology and the U.S. trade deficit.

However, Bloomberg News reported over the weekend that Chinese officials are growing hesitant to pursue a broad trade deal with the U.S, according to people familiar with the matter.

Vice Premier Liu He, who will lead negotiations for China, told dignitaries that his offer to the U.S. will not include commitments on reforming Chinese industrial policy or government subsidies, according to Bloomberg. These are among the Trump administration’s main demands in the trade talks.

All this story does is highlight how difficult reaching a trade deal will be.

This article was originally posted on FX Empire

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