Asian shares were lower Friday as investors continued to watch the brewing trade conflict between China and the U.S., and any signs of what’s in store from central banks.

Stocks fell the most in South Korea, after a report Friday by Kyodo News that Japan will remove the country from its list of most-favored trading partners, effective Aug. 2. Trade tensions between the two countries have been rising since a Korean court ruled last year that Japanese companies must pay compensation for forced-labor practices before and during World War II, a verdict that Japan claimed was illegal under international law.

South Korea’s Kospi fell 0.7%, while Japan’s benchmark Nikkei 225

NIK, -0.50%

  slid 0.5% in morning trading. Australia’s S&P/ASX 200

XJO, -0.21%

  lost 0.2%. Hong Kong’s Hang Seng

HSI, -0.47%

  was down about 0.5%, while the Shanghai Composite

SHCOMP, -0.18%

  was about flat.

Among individual stocks, IT equipment company Fujitsu

6702, +9.75%

  soared in Tokyo trading, while Honda Motor

7267, -1.79%

  and Nissan

7201, -2.56%

 , which announced 12,500 global layoffs as its quarterly profit plunged, fell. SoftBank

9984, +0.02%

  was barely changed after announcing a new $108 tech billion venture fund, backed by Apple

AAPL, -0.79%

  and Microsoft

MSFT, -0.38%

 , among others. In Hong Kong, food processor WH Group

288, +2.09%

  rose, while tech-component maker AAC

2018, -1.89%

  and oil producer CNOOC

883, -1.66%

  declined. LG Electronics

066570, -1.58%

  sank in South Korea while Kia Motors

000270, +0.81%

  gained. Beach Energy

BPT, +0.97%

  and Rio Tinto

RIO, +1.67%

 advanced in Australia.

“Investors continue to digest green shoots of upcoming U.S.-China trade talks amid persisting anxiety about the likely turn economic policies in the developed world take. The ECB failed to deliver any easing yesterday and the focus now shifts to the Fed policy,” Nicholas Mapa and Prakash Sakpal, analysts at ING, wrote in their report.

U.S. and Chinese envoys are set to meet in Shanghai next week for talks aimed at ending a tariff war.

China’s Ministry of Commerce said Thursday that Chinese companies are willing to import more U.S. farm goods.

That announcement followed President Donald Trump’s criticism that Beijing was backsliding on a promise to narrow its trade surplus with the United States by purchasing more American farm products.

U.S. stocks retreated from record highs on Wall Street Thursday as large companies delivered weak earnings and disappointing forecasts.

The S&P 500 index

SPX, -0.53%

  fell 15.89 points, or 0.5%, to 3,003.67. The Dow Jones Industrial Average

DJIA, -0.47%

  fell 128.99 points, or 0.5%, to 27,140.98. The Nasdaq composite

COMP, -1.00%

  fell 82.96 points, or 1%, to 8,238.54.

More than 36% of S&P 500 companies have reported their latest financial results and investors are still expecting a contraction in overall profit. That would mark the second quarter in a row of lower earnings.

Benchmark crude oil

CLU19, +0.32%

  gained 9 cents to $56.11 a barrel. It rose 14 cents to settle at $56.02 a barrel Thursday. Brent crude oil

BRNU19, +0.02%

 , the international standard, fell 3 cents to $63.23 a barrel.

The dollar

USDJPY, -0.05%

  rose to 108.66 Japanese yen from 108.10 yen on Thursday.

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