Stocks lose early gains on trade deal skepticism

Trade of the Day: Stocks edge lower; bonds and gold nudge higher; US stocks futures down

Quote of the Day: “I am very thankful that Alibaba, after five years, finally came home … I’m very confident that many other companies …similarly situated, have been traveling afar, ultimately will come home. We are ready for them,” said HKEX Chief Executive Charles Li referring to other Chinese internet and technology sector companies.

Stock of the day: Hitachi Chemical rose 15.4% to 535 yen after a report it was nearing sale of a core chemical unit to Showa Denko in a US$8 billion deal.

Number of the Day: $20 billion. Orders placed by investors within hours after China announced a four-part sovereign bond deal.

Tip of the Day: Nomura raised the target price of Japan-based wire and cable manufacturer Sumitomo Electric to 1,850 yen from 1,410 yen on higher volume growth guidance. This entails a rise of 17% from Monday’s close.

Asian markets gave up their early gains as investors turned skeptical after early gains were made on the back of hopes the world’s two largest economies were drawing closer to a partial agreement to cool a trade war that has lasted over two years and caused a slowdown and supply chain disruptions.

Hong Kong stocks also edged down after Chief Executive Carrie Lam did not offer any fresh proposals even while admitting Sunday’s election outcome reflected voters’ dissatisfaction with her government. Months of street protests and violence has affected business in the financial hub of Hong Kong and the government has forecast the economy to contract this year for the first time since 2009.

Initially, the market was lifted by a report Chinese Vice-Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin spoke on the phone and reached a consensus on several sections of a partial trade deal and agreed to stay in touch for the remaining issues, according to China’s Ministry of Commerce statement.

China’s e-commerce giant Alibaba had a solid debut on the Hong Kong stock exchange, rising 6.6% to HK$187.60 after selling 500 million shares at HK$176/share in a secondary listing. It had risen as much as 7.7% during the day. It was also the most heavily traded stock of the day at the Hong Kong stock exchange with a turnover of HK$13.99 billion, a big lead over the second most traded stock, Tencent, whose turnover struck HK$9.9 billion.

The Hang Seng index, Hong Kong’s benchmark, eased 0.3% to 26,913 points with telecom, technology and industries providing the main drag.

The overall sentiment remains firm after US Federal Reserve Chairman Jerome Powell said: “I see the glass as much more than half full,” referring to the economy. He made his comments in a speech at the Annual Meeting of the Greater Providence Chamber of Commerce, Providence, Rhode Island. He also said the monetary policy is now well positioned to support a strong labor market and return inflation decisively to the 2% target.