Asian stocks mixed on Huawei charges as trade talks loom

U.S. stocks fell Monday on signs that slowing Chinese growth was affecting corporate America. (Shutterstock Photo)

SINGAPORE — Asian stocks were mixed on Tuesday after the U.S. Justice Department unsealed criminal charges against China’s Huawei, its subsidiaries and a top executive ahead of trade talks.

KEEPING SCORE: Hong Kong’s Hang Seng index lost 0.2 per cent to 27,524.00 while the Shanghai Composite index rose 0.1 per cent to 2,600.59. Australia’s S&P ASX 200, reopening after a holiday, eased 0.5 per cent to 5,874.20. Japan’s Nikkei 225 index closed 0.1 per cent higher at 20,664.64 after tumbling earlier in the day. The Kospi in South Korea gained 0.3 per cent to 2,183.36. Stocks fell in Taiwan and throughout Southeast Asia.

WALL STREET: U.S. stocks fell Monday on signs that slowing Chinese growth was affecting corporate America. Caterpillar, considered an economic bellwether, reported weaker-than-expected earnings for the fourth quarter of 2018. The company said it expects the growth of construction equipment sales in China to be flat this year. Chipmaker Nvidia slashed its fourth-quarter revenue estimate, citing slowing demand in China among other reasons. The S&P 500 index lost 0.8 per cent to 2,643.85. The Dow Jones Industrial Average was down 0.8 per cent at 24,528.22 and the Nasdaq composite gave up 1.1 per cent to 7,085.68. The Russell 2000 index of smaller company stocks lost 0.6 per cent to 1,473.54.

HUAWEI CHARGES: The U.S. criminal charges against Chinese tech giant Huawei allege that it violated U.S. sanctions by using a Hong Kong shell company to sell equipment in Iran. The company is also accused of stealing trade secrets, including technology behind a robotic device that T-Mobile used to test smartphones. Several of Huawei’s subsidiaries and its chief financial officer Meng Wanzhou were to also face criminal charges. Meng was arrested while changing flights in Canada last month. China has demanded her release and warned of retaliation against American and Canadian executives.

US-CHINA TALKS: According to Bloomberg, Treasury Secretary Steven Mnuchin said at a briefing Monday that President Donald Trump is set to meet Chinese Vice Premier Liu He in Washington. Negotiators from both countries are expected to sit down for two days of trade talks starting Wednesday. While Trump’s presence may indicate that the U.S. is serious about striking a deal, charges against Huawei could cast a cloud over negotiations going forward.

ANALYST’S TAKE: Charges against Huawei ”illustrate the risks attached to the U.S.-China relationship,” DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary. “The actions by the DOJ show that it would not be enough for China to buy more U.S. goods. America wants China to make structural reforms especially on its intellectual property practices,” they added.

ENERGY: Benchmark U.S. crude added 49 cents to $52.48 per barrel in electronic trading on the New York Mercantile Exchange. It dropped $1.70 to settle at $51.99 per barrel on Monday. Brent crude, used to price international oils, rose 57 cents to $60.38 per barrel. It lost $1.78 to $59.81 per barrel in London.

CURRENCIES: The dollar was trading at 109.29 yen down from 109.35 yen late Monday. The euro strengthened to $1.1437 from $1.1428.