Hong Kong (CNN Business)Asian stocks were mixed Wednesday. Uncertainty about the future of US-China trade relations is still clouding markets.

South Korea’s Kospi (KOSPI) and Japan’s Nikkei (N225) were both stronger, moving up 0.8% and 0.2%, respectively.

The muddled moves followed US stock futures. The Dow (INDU) was up80 points, or 0.3%, during Asia hours, while the S&P 500 (SPX) and Nasdaq (COMP) also moved higher. All three indexes slumped during trading hours Tuesday as investors worried about recession warning signs in the bond market.

    The trade war in particular is vexing markets, according to Jingyi Pan, a market strategist for IG Group. She noted that people are “finding it difficult to put a finger as to where the ongoing US-China trade issue is headed.”

    “The saying that we are a tweet away from the next trade escalation between US and China had certainly grown to become the broad view,” she wrote in a research note Wednesday.

    Indeed, US President Donald Trump’s announcement at the start of the month — on Twitter — that he would add new tariffs on China sent markets into a spiral. Stocks have been jittery since then as investors have tried to make sense of seemingly mixed signals on trade progress, coupled with concerns about economic growth.

    “The Trump premium following China’s supposed ‘its good to talk’ phone call appears to be slowly evaporating as recession fears rise,” wrote Jeffrey Halley, a senior market analyst at Oanda, in a research note. He was referring to Trump’s assertion earlier this week that China called to relay a desire to return to negotiations, which Chinese officials later said they hadn’t heard about. “China’s deafening silence on whether they did or didn’t ring the president isn’t helping either.”

    Halley added that Asia “will probably dwell” on the recession worries that rattled Wall Street.

    Trade tensions between Japan and South Korea were also simmering on Wednesday. Japan’s decision to remove its neighbor from a so-called white list went into effect. That means that Japanese exports to South Korea now require additional screening to make sure they are not used for weapons and military applications.

    Japan’s Chief Cabinet Secretary Yoshihide Suga said Wednesday that “negative and irrational moves from South Korea” are “making the situation very difficult.”

    Suga said Japan would stand by its policies and urged South Korea to take “wise actions.”

    The South Korean government registered a “deep regret and strong protest” in a statement on Wednesday, calling on Japan to take back its decision.

    The decision “has a negative effect not only on the Korea-Japan economic cooperation but on regional prosperity and the global free trade order,” South Korea’s foreign ministry said in a statement.

    The fight between the two countries escalated last week when South Korea announced that it would scrap its military intelligence-sharing agreement with Japan.

      Asian markets are generally on pace for a bad month. The Hang Seng has fallen more than 7% in August, putting it on track for its worst month since May. Hong Kong is grappling not just with trade war and slowdown fears, but also with months of mass protests. On Tuesday, China Foreign Minister Wang Yi told a Hong Kong business delegation that the city was facing its most serious situation since the British handed it back to China in 1997.

      The Shanghai Composite and the Kospi are both down for the second month in a row. The Nikkei is also lower.

      Source: http://edition.cnn.com/

       

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