Asian markets quiet as investors shrug off the US-China trade deal

Asian markets mostly fell slightly on Monday, pulling back a bit from last week’s gains.

Hong Kong’s Hang Seng Index retreated 0.3%, while Japan’s Nikkei 225 and South Korea’s Kospi both moved marginally lower.

China’s Shanghai Composite Index briefly lost 0.3%, but later erased the losses and was last trading flat, but in positive territory.

The slump came after all four indexes jumped Friday on news that the United States and China had reached a “phase one” trade deal that rolled back some tariffs and led Washington to cancel another round of duties scheduled to take effect Sunday.

Beijing on Sunday also called off additional tariffs set to kick in on US goods.

The Chinese government on Monday called the “phase one” deal a “positive,” adding that it will reduce market uncertainty, boost confidence and promote trade and economy development.

A spokesperson for China’s national statistical bureau made those remarks as the government released new data about the country’s economy. Retail sales grew 8% in November, better than the previous month and more than analysts expected, according to a Refinitiv forecast. Industrial output increased 6.2%, also better than expected.

The data indicates that China’s economic momentum picked up last month, wrote Louis Kuijs, head of Asia economics for Oxford Economics, in a Monday report.

He said that China will continue to be challenged by “lackluster global growth,” and that there is still a “substantial” risk that the US-China relationship could deteriorate again.

But the fact that a trade truce was reached at all is “clearly a positive, and we expect it will have a favorable impact on sentiment and confidence in China,” Kujis said.