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

Tokyo — Asian shares pulled back slightly on Wednesday as investors awaited new developments towards scaling back a bruising trade war between the US and China.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.11%. Australian shares were down 0.09%, Chinese stocks drifted 0.08% lower while Japan’s Nikkei stock index tacked on 0.2%.

Treasury yields fell slightly in Asia and crude oil futures also dipped as investors took a breather as US and Chinese negotiators continued their efforts to seal a preliminary trade deal. The world’s two biggest economies have signalled they are pushing hard for a “phase one” trade agreement, possibly some time this month.

The dollar held onto overnight gains against the yen and the euro after better-than-expected data on the US services sector, but some analysts warn it will be difficult to shake lingering concern about the global economic outlook.

“We’ve had a good run-up, but there may be some consolidation,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

“The trade war is the biggest reason that global growth has weakened over the past 18 months. We would like to see tariffs scaled back. We’re still waiting for clearer signs of a resolution.”

US stock futures edged 0.11% lower on Wednesday in Asia after the S&P 500 gave up just 0.01% on Tuesday, having reached a record high in the previous trading session.

Traders and investors hope a preliminary Sino-US trade pact will roll back at least some of the punitive tariffs that Washington and Beijing have imposed on each other’s goods, but it is still uncertain when or where US President Donald Trump will meet Chinese President Xi Jinping to sign the agreement.

In the onshore market the yuan traded at 6.9976 vs the dollar, approaching a three-month high as currency traders took their cue from hopes for a trade deal.

Treasury prices rose slightly in Asia, recovering from a sell-off on Tuesday after data from the Institute for Supply Management (ISM) showed the US services sector expanded more than expected in October.

The yield on benchmark 10-year Treasury notes fell to 1.8442% in Asia on Wednesday, while the two-year yield fell slightly to 1.6145%.

A jump in oil prices overnight also faded in Asian trading. US crude fell 0.47% to $56.96 per barrel. Brent crude fell 0.52% to $62.63 per barrel.

Elsewhere in the currency market, the dollar continued to benefit from the positive ISM data.

The dollar traded at 109.076/¥, close to its highest since August 1. The greenback also changed hands at $1.1075/€, approaching its highest level since October 16. 

Reuters