Home business Asia stocks gain as increased tariffs on China loom

Asia stocks gain as increased tariffs on China loom

Stocks in Asia rose in Friday morning trade, despite increased U.S. tariffs on Chinese goods due to kick in later today.

Mainland Chinese shares were higher in early trade, with the Shanghai composite gaining about 1.9% and the Shenzhen component jumping 2.56%. The Shenzhen composite also rose 2.418%.

The advances came despite what is widely expected to be a major tariff hike on Chinese imports by the United States.

U.S. President Donald Trump has set a 12:01 a.m. ET Friday deadline to increase tariffs from 10% to 25% on $200 billion worth of Chinese goods. Beijing has said it will retaliate if the higher levies are imposed.

Meanwhile, Hong Kong’s Hang Seng index added 1.33%.

The Nikkei 225 in Japan gained 0.65% in morning trade, with shares of index heavyweight Fast Retailing adding more than 1%. The Topix also rose 0.74%.

In South Korea, the Kospi bounced back back from Thursday’s losses, rising 0.73%. The index had tumbled around 3% in the previous session. Shares of industry heavyweight Samsung Electronics gained more than 1.5%.

The ASX 200 in Australia also rose 0.2% as most sectors advanced.

Still, one economist described the impending tariff hike as the “single-biggest binary risk event for markets today.”

“Expect volatility to be kicked up mid-day in Asia, with risk of lunch-time indigestion (if tariffs are hiked) spilling over to the European session regardless of the outcome,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a morning note.

In overnight market action, U.S. stocks declined ahead of the implementation of higher tariffs from Washington on Chinese goods.

Chinese Vice Premier Liu He is currently in Washington for trade negotiations with the U.S. Liu, however, is meeting with Trump’s trade team without the title of “special envoy” for Chinese President Xi Jinping, a role he held in previous talks, suggesting he may have diminished authority to make concessions that could be crucial to striking a deal.

The recent developments marked a turnaround in sentiment, with investors previously expecting a deal to be announced between the two economic powerhouses to end their protracted trade war.

“From (the) Chinese government point of view, I think they will tend to get a little bit bored with these antics because the China government really is about planning,” Jim McCafferty, head of Asia ex-Japan research at Nomura Securities, told CNBC’s “Squawk Box” on Friday.

“It’s very hard to plan when you’ve got this erratic partner in the U.S., which is changing (its) mind every few days. So, I think attitudes will change and the Chinese may actually get bored,” McCafferty said.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.366 after slipping from levels above 97.5 yesterday.

The Japanese yen, widely viewed as a safe-haven currency, traded at 109.90 against the dollar after touching an earlier high of 109.68. The Australian dollar was at $0.7003, in a turbulent trading week that has seen the currency scale highs above $0.7020.

Oil prices rose in the morning of Asian trading hours, with the international benchmark Brent crude futures contract gaining 0.94% to $71.05 per barrel and U.S. crude futures adding 0.99% to $62.31 per barrel.

— CNBC’s Yun Li contributed to this report.