Asian markets were mostly down in early trading Thursday as investors reined in earlier optimism of a pending trade deal between the U.S. and China.

Reuters reported Wednesday that the “phase one” deal, which was hoped to be signed in mid-November, might be delayed until December, and that European locations, including London, were being considered for a meeting site for Presidents Donald Trump and Xi Jinping.

“The delay, though, may be hiding deeper issues with the trade talks,” Jeffrey Halley, senior Asia Pacific market analyst for Oanda, wrote in a note. “Namely, the scale of tariff rollbacks and other conditions that China now feel they can demand from the U.S. Believing the U.S. president is weakened, and thus more amenable to concessions is a dangerous game,” he said. “Push too hard, and we could very quickly be back to square one.”

Japan’s Nikkei

NIK, -0.06%

  dipped 0.1% and Hong Kong’s Hang Seng Index

HSI, -0.34%

  fell 0.4%. The Shangahi Composite

SHCOMP, -0.30%

  slipped 0.3% while the smaller-cap Shenzhen Composite

399106, +0.19%

  rose 0.2%. South Korea’s Kospi

180721, -0.14%

  was about flat, while benchmark indexes in Taiwan

Y9999, -0.71%

 , Singapore

STI, +0.03%

 , Malaysia

FBMKLCI, -0.01%

  and Indonesia

JAKIDX, -1.31%

  retreated. Australia’s S&P/ASX 200

XJO, +1.00%

  gained 0.8%.

Among individual stocks, Mitsubishi Motors

7211, -6.25%

  and Kobe Steel

5406, -4.70%

  sank in Tokyo trading. SoftBank

9984, -2.87%

  slipped after the company’s CFO said the investment strategy for its Vision Fund will not change, despite mistakes made with WeWork. Toyota shares

7203, +0.55%

  inched down ahead of quarterly earnings later in the day. In Hong Kong, AAC

2018, -3.52%

  and Tencent

700, -1.92%

  fell, while Samsung

005930, -1.13%

  declined in South Korea. Foxconn

2330, -1.29%

  dropped in Taiwan, while National Australia Bank

NAB, +2.19%

 and Commonwealth Bank

CBA, +1.36%

  gained in Australia.

After sinking 0.3% initially Wednesday, the S&P 500

SPX, +0.07%

  erased its loss within about two hours. The index closed 2.16 points, or 0.1% higher, at 3,076.78. It’s within two points of its record. The Dow Jones Industrial Average

DJIA, +0.00%

  less than 0.1% to 27,492.56, and the Nasdaq composite

COMP, -0.29%

  fell 0.3% to 8,410.63.

The U.S.-China trade war has been a top concern for investors since early 2018, and momentum has recently been tilting toward at least a partial agreement. That, combined with encouraging reports on the economy and corporate profits, have recently propelled U.S. indexes past their prior peaks from July to all-time highs.

While acknowledging that trade talks could easily falter again, Jeff Mills, chief investment officer at Bryn Mawr Trust, said both sides have an incentive to come to a deal. China’s economic growth has slowed under the weight of increased U.S. tariffs. Trump’s chances of re-election, meanwhile, likely hinge in large part on the economy, and a worsening trade war would only sour it.

Mills is optimistic the economy will show more life after the Federal Reserve cut interest rates three times this year, if trade tensions continue to ratchet lower. It would be a sharp turnaround from just a few months ago, when worries were spiking that Trump’s trade war and four interest-rate increases by the Federal Reserve in 2018 could tip the economy into a recession.

“People know this intellectually but tend not to focus on it: Changes in interest rates impact the economy with a significant lag,” Mills said. “What we’ve been seeing the last year or so is the economy absorbing the rise in interest rates that we experienced in 2018.”

Early next year, the economy should start to get a boost from the Fed’s three rate cuts since the summer, “and I would expect the market to see the recession narrative as overblown,” he said.

Benchmark U.S. crude

CLZ19, -0.05%

  lost 3 cents to $56.32 per barrel in electronic trading on the New York Mercantile Exchange. It gained 12 cents to close at $56.35 per barrel. Brent crude

BRNF20, -0.08%

 , used to price international oils, fell 2 cents to $56.33.

The dollar

USDJPY, -0.26%

  fell to 108.68 Japanese yen from 108.96 yen.

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