Asia stocks set to dip as China traders return

A man is reflected against an electronic board displaying stock information inside the Australian Securities Exchange. (Bloomberg pic)

SYDNEY: Stocks look set to start the week on a cautious note as Chinese markets reopen ahead of a potentially pivotal week for US-China trade talks, with doubt on the possibility for progress creeping back into markets.

Resurgent worries on global growth are driving bonds higher and threatening to dent this year’s rally in riskier assets, with equities dipping last week.

Futures indicate a lower start for shares in Australia and Hong Kong, with Chinese exchanges reopening after a one-week holiday during which a gauge of the country’s Hong-Kong traded firms declined.

Japan is shut for a holiday, so Treasuries won’t trade until the London open after yields edged down to 2.63% on 10-year notes last week.

The US and China may struggle to reach a deal before the March 1 deadline for higher tariffs, while warnings mount that the dispute is curbing the global economic expansion and denting corporate profits.

Chinese Vice-Premier Liu He will join Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing for high-level trade talks this week.

In Washington, the US government could be headed for another shutdown as political tensions flare between Congress and the president.

Elsewhere, iron ore is being rocked by the crisis at Brazil’s Vale, with prices surging to the highest in years on concern over a supply crunch.