(Sharecast News) - Asia-Pacific markets ended mixed on Friday as investors weighed a positive phone call between US president Donald Trump and his Chinese counterpart Xi Jinping, in which the two leaders agreed to resume trade negotiations.
Trump described the 90-minute call as "very good", stating it focused "almost entirely" on trade and reached a "very positive conclusion for both countries".
Patrick Munnelly, market strategy partner at TickMill, said on Friday morning that stock gains were fuelled by optimism that tensions between the US and China could ease following Trump's agreement with Xi to conduct further trade discussions.
"Asian stock markets dipped as discussions between Trump and Xi did not lift investor mood, with many opting to remain cautious ahead of US employment figures," he noted.
"The MSCI Asia-Pacific Index decreased by 0.1% on Friday but remains on track for its seventh increase in eight weeks.
"Investors have been cautious about taking significant risk ahead of the important payrolls report, which could offer insights into whether the Fed can fulfill market anticipations for two interest rate reductions in 2025."
Munnelly said traders also expressed disappointment that the call between Xi and Trump did not yield any notable progress.
"Trump merely stated that discussions would commence soon at a yet-to-be-determined location as both nations seek to address conflicts over tariffs and rare earth minerals.
"Regarding trade, Trump acknowledged on Thursday that the relationship with China had become 'a little off track', but stated that now 'we're in very good shape with China and the trade deal'.
"It remains uncertain whether this call will lead to lasting trade harmony and, importantly, to the shipments of vital minerals required by US businesses."
Markets mixed as Trump-China trade saga continues
In Japan, the Nikkei 225 rose 0.5% to close at 37,741.61, while the broader Topix index advanced 0.47% to 2,769.33.
Gains were led by Mercari, which climbed 4.38%, Kajima, up 4.18%, and Oriental Land, which rose 4.06%.
Chinese equities were mixed - the Shanghai Composite inched up 0.04% to 3,385.36, with strong gains from Tianjin Realty Development Group, Danhua Chemical Technology, and TianJin Global Magnetic Card Co - each surging around 10%.
However, the Shenzhen Component fell 0.19% to 10,183.70, reflecting cautious sentiment amid continued trade uncertainty.
Hong Kong's Hang Seng Index declined 0.48% to 23,792.54.
Tech and travel stocks were among the worst performers, with Semiconductor Manufacturing International Corporation down 4.85%, Trip.com Group falling 3.31%, and Alibaba Health Information Technology losing 2.81%.
Australia's S&P/ASX 200 dropped 0.27% to 8,515.70, dragged lower by heavy losses in mining and tech stocks.
Nuix tumbled 6.12%, Regis Resources slid 5.83%, and Pilbara Minerals fell 5.19%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 eased 0.11% to 12,563.48.
Fletcher Building declined 2.54% after being sued by SkyCity Entertainment over delays to the International Convention Centre in Auckland.
SkyCity was seeking more than NZD 330m (146.94m) in damages, citing contract breaches and a fire in 2019 that left the project over six-and-a-half years behind schedule.
Pacific Edge and Infratil also fell in Wellington, down 2.02% and 1.8%, respectively.
South Korean markets were closed for the Memorial Day holiday.
In currency markets, the dollar strengthened across the region, gaining 0.4% on the yen to trade at JPY 144.10, while it rose 0.25% against the Aussie to AUD 1.5409, and edged up 0.1% on the Kiwi, changing hands at NZD 1.6587.
Oil prices softened slightly, with Brent crude futures last down 0.12% on ICE at $65.26 per barrel, while the NYMEX quote for West Texas Intermediate fell 0.19% to $63.25.
Reserve Bank of India makes outsized rate cut, warning over China demand
In economic news, India's central bank cut its benchmark interest rate by 50 basis points to 5.5% on Friday, marking its third consecutive reduction since February and the lowest level since August 2022.
It was a move that surprised markets, coming below the Reuters consensus estimate of a 25 basis point cut to 5.75%.
The Reserve Bank of India cited moderating inflation and strong recent data, including a 7.4% year-on-year expansion in fourth-quarter GDP - well above the 6.7% forecast.
Elsewhere in Asia, economists were warning that weak domestic demand in China may present a deeper challenge than trade tensions with the US.
Raymond Yeung, ANZ's chief Greater China economist, said in a report that despite retail sales having outpaced total goods exports in recent years, household spending remained under pressure.
A sluggish property market was continuing to erode confidence, he noted, adding that China's debt-driven investment model could contribute to overcapacity and prolonged deflation risks during its next five-year plan cycle from 2026 to 2030.
Nomura meanwhile warned of a broader regional slowdown, forecasting a period of below-trend growth and subdued inflation across Asia.
The bank said it expected Thailand to remain mired in deflation, exacerbated by tight financial conditions, weak tourism, and China's spillover effects.
In India, Nomura saw growth moderating due to softer credit and investment, projecting up to 100 basis points of further rate cuts as inflation continues to undershoot targets.
South Korea was expected to delay monetary easing, with just two rate cuts anticipated in late 2025, driven by fiscal stimulus under its new government.
Meanwhile, Malaysia was set to outperform regional peers on the back of strong domestic demand and infrastructure spending, Nomura said, with Bank Negara likely to keep rates steady despite inflationary pressures from reduced subsidies.
Reporting by Josh White for Sharecast.com.
26.87 (0.30%)
0.00