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Asia markets edge higher ahead of trade talks, central bank decisions

Lisa Micheal 3 Jul 29

Stocks in Asia Pacific edged up in Tuesday morning trade as investors await developments from U.S.-China trade talks this week in Shanghai as well as monetary policy decisions from major central banks.

The Nikkei 225 rose 0.76% in morning trade, with shares of index heavyweight Fanuc jumping 3.89%. The Topix index also added 0.59%.

Over in mainland China, the Shanghai composite added 0.33% in early trade, while the Shenzhen component rose 0.46% and the Shenzhen composite gained 0.446%.

Hong Kong's Hang Seng index pared losses from Monday to bounce back in early trade following yesterday's press conference, when Beijing reiterated their firm support for the city's embattled leader Carrie Lam amid a series of violent clashes. It also suggested there will not be a change in its management of Hong Kong in the near future. The index traded 0.29% up in the morning.

Chinese tech giant Tencent's shares rose 0.91%, with the company announcing Monday that it would cooperate with Qualcomm on gaming devices and 5G.

In South Korea, the Kospi rose 0.44% following a slump on Monday, with shares of index heavyweight Samsung Electronics jumping more than 1%. Over in Australia, the S&P/ASX 200 gained 0.4%.

Overall, the MSCI Asia ex-Japan index added 0.28%.

Investors will be watching for the Bank of Japan's announcement of its decision on interest rates at 11:00 a.m. HK/SIN on Tuesday, after the European Central Bank last week signaled a potential rate cut and more monetary easing ahead.

"The BoJ is widely expected to make no monetary policy changes and reiterate its 'powerful monetary easing' stance," Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, wrote in a morning note.

The risk that the Japanese central bank introduces more aggressive easing measures, however, "cannot be ruled out," Grace said. This could result in a "headwind" for the Japanese yen. The currency last traded at 108.79 against the dollar after weakening from levels below 108.5 yesterday.

Government data released earlier on Tuesday showed Japan's factory output falling more than expected in June.

Overnight stateside, the Dow Jones Industrial Average rose 28.90 points to close at 27,221.35. while the Nasdaq Composite fell 0.44% to end its trading day at 8,293.3. The S&P 500 slipped 0.16% to close at 3,020.97.

Meanwhile, U.S.-China trade negotiations are set to happen in Shanghai this week as the two economic powerhouses seek to reach a deal to end a protracted trade dispute.

Investors also await the U.S. Federal Reserve's decision on interest rates, set to be announced on Wednesday stateside. The central bank is widely expected to cut its benchmark lending rate for the first time since 2008 by 25 basis points.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.124 after rising from levels below 98.0 yesterday.

The Australian dollar changed hands at $0.6897 following declines from levels above $0.702 seen last week.

Oil prices rose in the morning of Asian trading hours, as international benchmark Brent crude futures added 0.5% to $64.03 per barrel and U.S. crude futures gained 0.53% to $57.17 per barrel.

Here's a look at what's coming up ahead today:

  • Japan interest rate decision at 11:00 a.m. HK/SIN
  • China: First half financial statements for Huawei
  • South Korea: Samsung SDI, LG Electronics earnings
  • Hong Kong: Hang Lung Group, Hang Lung Properties, IMAX China earnings
  • Japan: Sony, ANA Holdings, Mitsubishi Electric, SMFG, Nintendo earnings

— CNBC's Thomas Franck contributed to this report.