Asian markets flat as Japan reports weak export data

Asian markets were flat in subdued trading Wednesday as Japan reported weak export data and news surfaced of possible hiccups in China-U.S. trade talks.

Japan’s Nikkei 225 index NIK, +0.09%  was less than 0.1% higher and South Korea’s Kospi SEU, +0.24% rose 0.3%. Hong Kong’s Hang Seng HSI, -0.03%  edged less than 0.1% higher and the Shanghai Composite index SHCOMP, -0.13%  likewise gained less than 0.1%. Australia’s S&P ASX 200 XJO, -0.26%  was flat, while shares fell in Taiwan Y9999, -0.53% , Singapore STI, -0.31%  and Indonesia JAKIDX, +0.27%  but rose in Malaysia FBMKLCI, -0.96% .

Earlier, U.S. investors returned from a holiday Tuesday to lower global growth forecasts by the International Monetary Fund and news that China’s economy expanded last year at its slowest pace since 1990. Reports that the Trump administration recently rejected a meeting with Chinese trade officials caused major indexes to slip further. The S&P 500 index SPX, -1.42%  declined 1.4% to 2,632.90. The Dow Jones industrial average DJIA, -1.22%  dropped 1.2% to 24,404.48 and the Nasdaq Composite COMP, -1.91%  was down 1.9% at 7,020.36.

Among individual stocks, Apple supplier Japan Display 6740, +15.00%  surged after a Wall Street Journal report that it is seeking a bailout from an investor group due to disappointing sales of the iPhone XR. Subaru shares 7270, -2.60%  tumbled after the Japanese auto maker halted auto production over a defective part. In Hong Kong, Apple suppliers AAC 2018, +0.00%  and Sunny Optical 2382, -1.64%  fell, as did oil producer CNOOC 0883, -1.85% . Oil companies fell in Australia too, with Woodside Petroleum WPL, -1.34%  and Oil Search OSH, -1.06% down.

On Wednesday, Japan released weaker-than-expected trade data for December. The country said its exports fell by 3.8% from a year earlier, its largest drop in two years. It also posted its first full-year trade deficit since 2015. Imports climbed 1.9% in December, missing the market estimate of a 3.7% rise, and way below November’s 12.5% surge. Weaker Japanese exports suggest that a slowdown in China, the world’s second largest economy, is starting to have an impact on companies elsewhere that rely on it for business.

Media outlets including the Financial Times and CNBC have reported that the White House turned down an offer by Chinese trade officials to meet in Washington this week, because of the lack of progress on matters like intellectual property theft. According to the reports, which cited unnamed sources close to the matter, the preparatory talks were meant to soften the ground before China’s economy czar, Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer meet on Jan. 30 and 31. White House economic adviser Larry Kudlow denied that, saying both sides are working toward the higher level talks. Separately, Kudlow told Reuters that President Donald Trump is “not going to back down” on forcing China to make substantive reforms concerning trade.

“The U.S. strategy might be to raise pressure on the Chinese ahead of the hard deadline in March, but this makes for uncomfortable interpretation by markets, and could potentially induce excessive volatility in the interim,” Chang Wei Liang of Mizuho Bank said in a commentary.

U.S. crude CLH9, +0.17%  picked up 3 cents to $53.04 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed $1.03 lower at $53.01 per barrel on Tuesday. Brent crude LCOH9, +0.23% , used to price international oils, gained 7 cents to $61.57 per barrel. It dropped $1.24 to $61.50 per barrel in London.

The dollar USDJPY, +0.22%  strengthened to 109.69 yen from 109.37 yen late Tuesday.

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