World markets: Stocks tread water ahead of signing of initial US-China trade deal

Tokyo: Stocks were steady in early Asian trade on Wednesday as investors awaited the signing of an initial US-China trade deal, with sentiment somewhat dented by comments from the US Treasury Secretary`s that tariffs would remain in place for now.

MSCI`s broadest index of Asia-Pacific shares outside Japan eased 0.13%, Japan`s benchmark Nikkei and South Korea`s Kospi shed 0.29% and 0.48%, respectively, while Australian stocks added 0.33%.

Treasury Secretary Steven Mnuchin said on late Tuesday that the United States would keep in place tariffs on Chinese goods until the completion of the second phase of a US-China trade agreement.

The news came hours before the signing of a preliminary trade agreement to ease an 18-month-old trade war between the world`s two largest economies.

Wall Street stocks dipped on Tuesday, reversing earlier intraday record highs after media reported the United States would likely maintain tariffs on Chinese goods past November`s presidential election. 

"We should not expect further tariff relief until after the November Presidential elections, suggesting that today`s agreement is probably as good as it gets for 2020," said Tapas Strickland, director of economics at National Australia Bank.

US Treasury yields ticked down as investors took stock of weaker-than-expected consumer prices and the expected signing of the interim trade deal, with benchmark 10-year note yield falling to 1.807%.

Markets were also absorbing news the U.S. government is nearing publication of a rule that would vastly expand its powers to block shipments of foreign-made goods to China`s Huawei, as it seeks to squeeze the blacklisted telecoms company, two sources said.

In the currency market, the Japanese yen reversed earlier losses against the dollar as news U.S. tariffs would remain on Chinese goods through the U.S. election hurt risk sentiment.

The yen was last changing hands at 109.95 yen to the dollar, flat on the day, after hitting its weakest in near 8 months of 110.22 yen previous day. The euro was last traded at $1.1129 , also little changed on the day.

The offshore yuan weakened to 6.899, after rising to 6.865 per dollar, the strongest since July 11, on Tuesday.

The dollar index against a basket of currencies was flat at 97.367. 

Oil prices edged higher on Tuesday after five days of declines as the United States and China prepared to sign the preliminary trade deal and as Middle East tensions eased. 

In early Asian trade on Wednesday, US West Texas Intermediate (WTI) crude slipped 0.1% to $58.17 per barrel.