Asian stock markets slip ahead of US-China trade deal signing

Stocks slipped in 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 that tariffs would remain in place for now.

MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.40%, Japan's benchmark Nikkei and South Korea's KOSPI shed 0.46% and 0.40%, respectively, while Australian stocks added 0.33%.

China's Shanghai Composite fell 0.59% and Hong Kong's Hang Seng dropped 0.72%.

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

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 today's agreement is probably as good as it gets for 2020," said Tapas Strickland, director of economics at National Australia Bank in Sydney.

He added that Mnuchin's comment didn't come as a total surprise to the market and the underlying sentiment should remain intact.

In the currency market, the Japanese yen, often perceived as a safe haven, reversed earlier losses against the dollar as news US tariffs would remain on Chinese goods through the US election hurt risk sentiment.

The yen was last changing hands at 109.90 yen to the dollar, a shade firmer on the day, after hitting its weakest level in nearly eight months of 110.22 yen the previous day.

The euro was last traded at $1.1129 and the dollar index against a basket of currencies stood at 97.368, both steady on the day.

The offshore yuan weakened to 6.905 per dollar after rising to 6.865, the strongest since July 11, on Tuesday.