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Shanghai Index Down, Dow Futures Up Amid Confusion Over Report of Trade Talks Stalemate

James Hyerczyk
China is down, but U.S. futures are up early Monday. This is causing a little confusion for traders after sources told CNBC on Friday that scheduling discussions for further trade talks have been put on hold since U.S. President Donald Trump’s administration has increased scrutiny of Chinese telecom companies.

The Asia/Pacific markets are trading mixed on Monday despite a report on Friday that claimed the United States and China had called off trade talks. This news weakened U.S. markets into the close, however, today’s overall trade is showing very little reaction to the story. The markets are down in China, however, this is being offset by a huge jump in Australian shares.

At 05:08 GMT, Japan’s Nikkei 225 Index is trading 21349.99, up 99.90 or +0.47 percent. The South Korean KOSPI Index is at 2064.99, up 9.19 or +0.45 percent and the Hang Seng Index is trading 27827.32, down 119.14 or -0.43 percent.

In China, the Shanghai Index is at 2865.25, down 17.04 or -0.59 percent and in Australia, the S&P/ASX 200 is at 6473.70, up 108.40 or +1.70 percent.

Are the Trade Talks On or Off?

China is down, but U.S. futures are up early Monday. This is causing a little confusion for traders after sources told CNBC on Friday that scheduling discussions for further trade talks have been put on hold since U.S. President Donald Trump’s administration has increased scrutiny of Chinese telecom companies.

Japan’s Economy Shows Growth

The Nikkei 225 Index is being supported by a jump in shares of Fast Retailing and Softbank Group. However, the catalyst behind its strength may be better-than-expected first quarter economic growth. Fresh data showed Japan’s economy grew at an annualized 2.1% in the first quarter. Traders were looking for a 0.2 percent contraction.

Surprise Election Results Drive Australian Shares Higher

Surprise election results over the week-end helped boost shares in Australia after the conservative coalition secured an outright parliamentary majority on Monday. The shocking election victory will allow Prime Minister Scott Morrison to progress his legislative agenda without the support of independents.

According to Bloomberg, “Despite trailing in most opinion polls, Prime Minister Scott Morrison waged a relentless attack on the Labor Party’s progressive agenda to take action on climate change and strip tax perks from wealthy Australians. At the same time, the government ran on its record of economic management, across-the-board tax cuts and a return to a budget surplus.”

Andrew Ticehurst, Sydney-based rate strategist at Nomura Holdings said, “As Labor’s tax proposals are off the table, giving some relief to the housing market, and with the incumbent government being viewed as stronger economic managers, business sentiment is expected to improve.”

“It’s a net positive for the equity market and the Australian Dollar will likely bounce,” Ticehurst wrote in a note to clients dated May 19.

This article was originally posted on FX Empire

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