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ASIA-MARKETS-UPDATE
Asian markets track Wall St gains, positives seen in US gridlock
HONG KONG, Nov 8, 2018 (BSS/AFP) – Asian markets mostly rose Thursday,
building on a global rally as investors bet that gridlock in Washington will
clip Donald Trump’s wings, preventing him from driving through measures that
would likely push up US interest rates.
Attention now turns to the end of the Federal Reserve’s policy meeting
later in the day, with its plans for hiking borrowing costs closely watched
in light of the midterm election results.
Bets the central bank would lift rates again next month and continue to do
so through 2019 have been a major cause of worry on trading this year but
with the chances of more Trump tax cuts greatly reduced, expectations have
been tempered.
However, analysts do not expect the Fed to alter its most recent outlook
for the economy, with Ian Shepherdson of Pantheon Macroeconomics, saying:
“The economic picture hasn’t changed meaningfully since the September
meeting, despite the gyrations in the stock market.”
But with Democrats now controlling the House and ready to hold the
president to account, observers expect them to push back against a number of
his measures, though work with him on others such as infrastructure spending
leading into the 2020 vote.
“With trade tensions to the fore over recent months and risk currencies in
the spotlight, the US midterms were being seen through the prism of whether
the outcome might embolden the president to go harder on trade or in effect
if the elections would clip his wings,” said National Australia Bank
economist David de Garis.
“With the Democrats gaining control over the House, the latter scenario
now might be a little more likely.”
– Sessions fired –
However, Stephen Innes, head of Asia-Pacific trading at OANDA added the
result “has left analysts debating what this will mean for policy going
forward”.
All three main Wall Street indexes ended more than two percent higher. And
the positive mood was reflected in Asia, where Tokyo climbed 1.8 percent.
Hong Kong added 0.3 percent but Shanghai dipped 0.2 percent with investors
unmoved by data showing Chinese exports jumped more than forecast in October.
Analysts put the figures down to companies ramping up business before painful
US tariffs kick in at the end of the year, with expectations for similar
results tipped before January.
Seoul jumped 0.7 percent, Sydney and Wellington each put on 0.5 percent,
and Taipei added 0.4 percent. There were also gains in Bangkok and Jakarta.
In early trade London rose 0.2 percent, while Paris and Frankfurt each
added 0.3 percent.
Eyes will be on developments in Washington after Trump fired Attorney
General Jeff Sessions, who had come under fire from the president over his
decision to step aside from a probe into Russian interference in the 2016
election.
He was replaced by a loyalist, casting into doubt the ability of Special
Counsel Robert Mueller — who had until now been insulated from White House
interference — to complete the investigation and raising concerns of an
early clash with Democrats.
– Oil edges up –
The dollar was flat after Wednesday’s sell-off, which came on the back of
lower expectations of more tax cuts.
The greenback edged up against its major peers, with the pound continuing
to gain support from hopes London and Brussels can hammer out a post-Brexit
agreement as a deadline looms.
Oil prices edged up slightly but remain subdued after data showing a surge
in US stockpiles, although they have been given support from reports OPEC
will reduce output again next year.
The cartel had started opening the taps again this year after a long-
running cap agreement with Russia, which had boosted prices, ended.
But with production now rising globally again — and the Iran sanctions
seemingly having little impact owing to US waivers — Bloomberg News said
ministers meeting in Abu Dhabi this weekend were considering the reduction.
“Saudi Arabia and Russia have increased production, and prices have come
down $15 a barrel,” Hossein Kazempour Ardebili, Iran’s representative to
OPEC, said. “They have over-balanced the market” and have no choice but to
cut about one million barrels a day.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 1.8 percent at 22,486.92 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 26,227.72 (close)
Shanghai – Composite: DOWN 0.2 percent at 2,635.63 (close)
London – FTSE 100: UP 0.2 percent at 7,133.91
Euro/dollar: DOWN at $1.1429 from $1.1434 at 2200 GMT
Pound/dollar: DOWN at $1.3120 from $1.3130
Dollar/yen: UP at 113.70 yen from 113.53 yen
Oil – West Texas Intermediate: UP 11 cents at $61.78
Oil – Brent Crude: UP 12 cents at $73.19 per barrel
New York – Dow: UP 2.1 percent at 26,180.30 (close)
BSS/AFP/HR/1445