The sidelong look he gives Hythlodaeus is skeptical at best, mildly agitated at worst. He was comfortable with being side-by-side looking out at the stars. There was no reason to fuss about when they could have simply changed topics.

So he folds his arms with his characteristic grumpy defiance. If anyone else had asked him he would enthusiastically refuse to placate them with compliance.

Since it's Hythlodaeus, though, an exception is made. He leans into Hythlodaeus with his arms still crossed. It's not a 'hug' by far, but he does submit to tolerating the physical affection without complaint.