Asia stocks fragile as trade anxiety overshadows Huawei reprieve

Asian stocks were on shaky ground on Wednesday, as earlier relief over Washington's temporary relaxation of curbs against China's Huawei Technologies failed to offset deeper worries about trade frictions between the world's two largest economies. The Chinese markets, which have endured a volatile few months, started off on a cautious note. The Shanghai Composite Index was last down 0.1%.

Australian stocks gave up 0.1% and South Korea's KOSPI fell 0.2%. Japan's Nikkei edged up 0.3%. MSCI's broadest index of Asia-Pacific shares outside Japan moved in and out of the red and last stood little changed.

"Some in the markets will continue to cling on to hopes of the United States and China reaching an agreement at the upcoming G20 meeting," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. "But the ongoing trade conflict looks to be a protracted one, and its potentially negative impact on various economies is becoming a running concern."

Leaders from G20 nations are scheduled to gather for a summit in Japan at the end of June. The U.S. Commerce Department on Monday granted Huawei Technologies Co Ltd a license to buy U.S. goods until Aug. 19, a move intended to give telecom operators that rely on Huawei time to make other arrangements. The United States blocked Huawei from buying U.S. goods last week in a major escalation in the trade war against China, saying the firm was involved in activities contrary to national security.

Shares of technology companies helped lift Wall Street on Tuesday after Washington's easing of curbs on Huawei. Chipmakers, many of which sell to Huawei, had been hit at the start of the week. "Notwithstanding the latest tweet from President Trump that some restrictions on Huawei had been eased, global equity markets have continued to underestimate the relentless expansion of the U.S.-China trade dispute," wrote Sean Darby, chief global equity strategist at Jefferies.

"The progression from tariffs, to direct actions against single Chinese companies and their inter-linked supply chains, has a wide-ranging impact on profitability for corporates in both economies that investors will find difficult to quantify." The dollar traded at 110.570 yen after popping up to a two-week high of 110.675 against the safe-haven Japanese currency overnight as U.S. yields rose in the wake of gains by Wall Street shares.

The euro was little changed at $1.1165 after brushing a 2-1/2-week trough of $1.1142. The pound was steady at $1.2710. Sterling had sunk to a four-month low of $1.2685 on Tuesday on Brexit worries but bounced back after British Prime Minister Theresa May proposed a "new" Brexit deal.

The Australian dollar, sensitive to shifts in risk sentiment, inched down 0.05% to $0.6882. The currency had suffered losses the previous day when Australia's central bank governor said interest rates might be cut as soon as next month. In commodities, U.S. West Texas Intermediate (WTI) crude futures were down 0.89% at $62.57 per barrel after American Petroleum Institute data showed that U.S. crude stockpiles rose unexpectedly last week.

Oil was also pressured by Saudi Arabia reiterating that it would aim to keep the market balanced and try to reduce tensions in the Middle East. Brent crude futures lost 0.47% to $71.84 per barrel.