By Gina Lee
Investing.com – Asian stocks were mostly up on Monday morning, reversing some earlier losses despite the mounting tensions between the U.S. and China over their latest tit-for-tat souring investment sentiment.
China ordered the closure of the U.S. consulate in Chengdu on Friday, in a retaliatory move after the U.S. ordered the closure of China’s consulate in Houston during the previous week. The U.S.’ mission was given a Monday deadline to close, while China’s mission was given a Friday deadline.
U.S. Secretary of State Michael Pompeo suggested last week that Washington and its allies must use “more creative and assertive ways” to change China’s ways. Disagreements over other issues such as Hong Kong’s national security law, Xinjiang, and Chinese claims in the South China sea have also ratcheted tensions between the two countries.
“U.S. President (Donald) Trump used to say China’s President Xi Jinping is a great leader. But now Pompeo’s wording is becoming so aggressive that markets are starting to worry about further escalation,” Norihiro Fujito, chief investment strategist at Mitsubishi Securities, told Reuters.
China’s Shanghai Composite was up 0.13% by 10:26 PM ET (3:26 AM GMT) while the Shenzhen Component jumped 1.04%. Chinese industrial profit jumped 11.50% year-on-year in June, against May’s 6% increase.
Japan’s Nikkei 225 fell 0.51% as markets re-opened after the previous week’s holiday.
South Korea’s KOSPI gained 1.04 % and Down Under, the ASX 200 rose 0.06%. Hong Kong’s Hang Seng Index was up 0.27%.
Meanwhile, top aides to U.S. President Donald Trump said on Sunday that they reportedly agreed in principal to a $1 trillion COVID-19 relief package proposed by Senate Republicans, cheering investor sentiment. But Democrats and Republicans have yet to come to an agreement over further stimulus measures before some previous measures expire at the end of the week, with investors monitoring the negotiations to gauge the prospects of economic recovery in the world’s largest economy.
Although some U.S. COVID-19 hot spots such as Florida, Arizona, California, Texas and New York reported decreasing numbers of cases and deaths on Sunday, the global number of COVID-19 cases continues a relentless march upwards. There are over 16.1 million cases worldwide as of July 27, according to Johns Hopkins University data.