A statue of a bull is displayed outside the Shenzhen Stock Exchange in the southern Chinese city of Shenzhen. File Picture: REUTERS/BOBBY YIP
A statue of a bull is displayed outside the Shenzhen Stock Exchange in the southern Chinese city of Shenzhen. File Picture: REUTERS/BOBBY YIP

Shanghai — Asian stocks eked out gains on Wednesday, with sentiment boosted by Wall Street’s rise and a record intraday high for the S&P 500 index on Tuesday, but fragile Chinese markets retreated after two days in the black.

Shares in much of the region were also aided by hope that the trade talks between the US and China expected this week will ease trade tension.

But Chinese investors sold shares across the board, sending both the Shanghai composite index and the blue-chip CSI300 index down 0.5%, as economic concern returned after the central bank said on Tuesday it would not resort to strong stimulus to support growth.

US President Donald Trump told Reuters on Monday that he does not expect much progress from the trade talks with China.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3%, while Japan’s Nikkei stock index advanced 0.7%. Seoul’s Kospi rose 0.4%, buoyed by tech firms as data showed robust chip exports, and shares in Taiwan were 0.2% higher.

But S&P futures turned lower on Wednesday morning as markets assessed the possible impact of a guilty plea from Trump’s former personal lawyer, and the conviction of former Trump campaign chairman Paul Manafort.

"Next to these headlines, trade news fell completely under the radar," Citi analysts said, noting "concern that something could come out linked to Trump or other of his associates" and that Cohen’s guilty plea sparked a late-session bid in US treasuries.

S&P E-mini futures were 0.2% lower at 2,855. The yield on benchmark 10-year Treasury notes fell to 2.8298% compared with the US close of 2.844% on Tuesday. Bond yields fall when prices rise.

Investors are also looking to Wednesday’s release of minutes from the US Federal Reserve’s August meeting, and a speech by Fed chairperson Jerome Powell on Friday for clues on future rate hikes.

Trump on Monday told Reuters he was "not thrilled" with the Fed under his appointee, Powell, for raising rates, and said the US central bank should do more to boost the economy.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, was at 2.5996% Wednesday compared with a US close of 2.608%.

Australian shares fell 0.3% the day after a leadership challenge to Prime Minister Malcolm Turnbull.

"There’s a bit of a risk premium now being built into Australia," said Hugh Dive, chief investment officer at Atlas Funds Management in Sydney. "If you’re a foreign investor, suddenly Australia’s looking a lot less attractive."

In New York on Tuesday, the S&P 500 rose as high as 2,873.23, topping the previous record of 2,872.87 set on January 26, and is poised to become the longest-running bull market in the index’s history on Wednesday.

The Dow Jones industrial average closed 0.25% higher at 25,821.95, the S&P 500 index rose 0.21% to 2,862.91, and the Nasdaq composite index added 0.49% to 7,859.17.

On Wednesday, the dollar edged higher against the yen, gaining 0.06% to ¥110.36.

The dollar index, which tracks the greenback against a basket of six major rivals, was 0.04% lower at 95.220.

The currency has sagged since Trump’s comments on Monday, in which he also accused China and Europe of manipulating their currencies.

The euro was up 0.05% on the day at $1.1575, while China’s yuan strengthened to 6.8437 to the dollar at 2.57am GMT, 76 pips stronger than its previous onshore close.

In commodity markets, US crude rose 0.4% to $66.10 a barrel. Brent crude was 0.3% higher at $72.81 a barrel.

Spot gold was flat, after earlier rising 0.2% to $1,197.76, its highest level since August 14.