Japan jumps 2%; private survey on China’s July manufacturing activity comes in above expectations

Stocks in Asia Pacific traded mixed Monday afternoon as U.S.-China tensions continue to heat up.

In Japan, the Nikkei 225 jumped 2.16% in afternoon trade, while the Topix index advanced 1.55%. Those moves followed the nearly 3% tumble in Japanese stocks on Friday.

Mainland Chinese stocks were higher by the afternoon, with the Shanghai composite up 1.08% and the Shenzhen component rising 1.624%.

A private survey released Monday showed China’s manufacturing activity expanded in July. The Caixin/Markit manufacturing Purchasing Manager’s Index came in at 52.8 for July, above expectations for a reading of 51.3 by economists in a Reuters poll. PMI readings above 50 signify expansion, while those that fall below that figure indicate contraction.

The Hang Seng index in Hong Kong shed 0.95%. South Korea’s Kospi was fractionally higher. Over in Australia, the S&P/ASX 200 dipped 0.1%.

Overall, the MSCI Asia ex-Japan index shed 0.59%.

Tensions between Washington and Beijing likely continued being watched by investors, with U.S. Secretary of State Mike Pompeo saying Sunday that U.S. President Donald Trump is set to announce “in the coming days” new actions related to Chinese software companies viewed by his administration as a national security threat.

On Friday, Trump told reporters he will act soon to ban Chinese-owned video app TikTok from the U.S., according to NBC News. Microsoft on Sunday confirmed it has held talks to buy TikTok in the U.S. from Chinese tech firm ByteDance.

Mizuho Bank’s Vishnu Varathan wrote in a Monday note that a sale of TikTok’s U.S. operations to Microsoft would be a “hollow relief if not a mere distraction.”

“It is certainly not a resolution of growing US-China animosity that may be tick-tocking to a more open conflict,” said Varathan, who is head of economics and strategy at the firm.

Meanwhile, HSBC on Monday reported a 65% plunge in its pre-tax profits for the first six months of 2020. Hong Kong-listed shares of HSBC were last down 1.86%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.445 after bouncing from levels below 93 late last week.

The Japanese yen traded at 105.83 per dollar after weakening sharply from levels below 105 late in the previous trading week. The Australian dollar changed hands at $0.7138 after slipping from levels above $0.72 last week.

Oil prices dipped in the morning of Asian trading hours, with international benchmark Brent crude futures down 0.41% to $43.34 per barrel. U.S. crude futures also shed 0.57% to $40.04 per barrel.