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China Down, Other Asian Stocks Up as Rally Fades

Most stock markets in Asia finished the morning with gains – Most stock markets in Asia finished the morning with gains following the lead of U.S. markets Wednesday. Markets in China and Hong Kong were the visible exception.

Hong Kong gave up early gains and traded with losses through much of the morning. The Hang Seng Index was down 0.29% to 26,06 by 1:40 AM EST (06:40 AM GMT). The Shanghai Composite Index was down 0.12% to 2,598.61 and the SZSE Component gave up 0.46% to 7,721.61.

Investors into China and Hong Kong stocks could not hold on to the generally upbeat mood. Investors in mainland China stocks have taken advantage of a recent rally in the Hong Kong market to cash out.

Bloomberg reported that investors from mainland China have sold the equivalent of $637 million worth of Hong Kong shares over the last six days through programs that link exchanges in mainland China and Hong Kong.

Still, the Hang Seng is poised for its biggest monthly recovery in six years with a 6.7% gain through the month of November.

Most eyes are now on the anticipated meeting between U.S. President Donald Trump and Chinese President Xi Jinping this weekend during the G20 summit in Argentina for hints about future developments in the ongoing trade war between the two countries. U.S. officials, most notably White House economic adviser Larry Kudlow, have suggested that a trade deal is possible.

“There is a big opportunity. President Trump has indicated he’s open. Now we have to know if President Xi is open,” Kudlow said on Tuesday.

At the same time, U.S. stock saw their biggest gains in about eight months Wednesday after investors were encouraged by comments from Federal Reserve Chairman Jerome Powell, who suggested the central bank may be almost done raising interest rates. Powell said rates are close to neutral.

Powell’s comments helped the S&P 500 gain 2.3% and the Dow 30 2.5% while the Nasdaq jumped 2.95%.

By mid-day in Asia Thursday, Japan’s Nikkei 225 was up 0.34% to 22,253. South Korea’s KOSPI was up 0.19% at 2,112.49. Both markets gave up some ground from much larger gains through the morning.

In Australia, the S&P/ASX 200 was up 0.58% to 5,758.40.

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