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Hong Kong ends tough year with gains after Trump hails trade progress
HONG KONG, Dec 31, 2018 (BSS/AFP) – Hong Kong ended a tough year on a
positive note Monday, with the Hang Seng posting strong gains after US
President Donald Trump hailed “big progress” on resolving Washington’s trade
war with Beijing.
In light holiday trading with Tokyo and Shanghai closed, stocks in the
south China financial hub were buoyed by Trump’s upbeat assessment on
prospects for ending the tariff conflict between the world’s two biggest
economies, which has rattled markets globally.
“Just had a long and very good call with President Xi of China,” Trump
said Saturday on Twitter.
“Deal is moving along very well. If made, it will be very comprehensive,
covering all subjects, areas and points of dispute. Big progress being made!”
Washington and Beijing imposed tit-for-tat tariffs on more than $300
billion worth of goods in total two-way trade earlier this year, locking them
in a conflict that has begun to eat into profits and contributed to stock
market plunges.
While investors remain concerned, relations have thawed since Chinese
President Xi Jinping and Trump agreed to a 90-day trade truce in early
December while the two sides work to ease trade tensions by March 1.
Chinese state news agency Xinhua quoted Xi as telling Trump both leaders
want “stable progress” in ties.
“China attaches great importance to the development of bilateral
relations,” Xi added.
Analysts welcomed the apparent progress, following a torrid time for
equities which have also been unnerved by fears over slowing global growth, a
partial US government shutdown, US Federal Reserve interest rates hikes and
Trump’s attacks on the central bank.
“It’s a positive development,” Tony Morriss, Bank of America Merrill Lynch
head of economics and rates strategy, said in a Bloomberg TV interview.
“What we’d like to see now is the market pricing out any further action
from the Fed, the stock markets stabilising and focusing on some positive
headlines on trade.”
MORE/HR/1105
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– ‘Very few safe havens’ –
Key Asian markets have limped towards the end of the year in bear market
territory, with Tokyo’s benchmark Nikkei index rounding out 2018 with its
first annual loss since 2011 and Shanghai becoming the worst-performing major
stock market in the world.
Overall, global stocks are set for their worst year since 2008.
“There were very few safe havens which worked this year,” said Jason Low,
senior investment strategist with DBS Group Holdings’ wealth-management unit.
But the Hang Seng shrugged off disappointing Chinese economic data Monday
to end a shortened trading day up more than one percent.
Sydney closed marginally lower, while markets in Indonesia, the
Philippines and South Korea were also closed for a holiday.
Manufacturing purchasing managers index data in China fell below 50 — the
line between expansion and contraction — for the first time since 2016,
adding to concern about the slowing domestic economy.
“The slowdown will continue into the next year,” said Larry Hu, a Hong
Kong-based economist at Macquarie Securities Ltd.
“The weak PMI could result in more government stimulus to shore up the
economy.”
In commodities markets, oil chalked up gains on renewed US-China trade
optimism.
However, both oil benchmarks have lost around 40 percent of their value
from four-year peaks in early October and are expected to continue
struggling, hobbled by a supply glut and a slowing global economy.
“The effects of rising inventories and an economic gloom for the near
future have exacerbated bearish influences in oil prices,” said Benjamin Lu,
commodities analyst with Phillip Futures in Singapore.
– Key figures around 0430 GMT –
Tokyo – Nikkei 225: Closed for public holiday
Hong Kong – Hang Seng: UP 1.3 percent at 25,845.70 (close)
Shanghai – Composite: Closed for public holiday
Euro/dollar: DOWN at $1.1430 from $1.1445 at 2200 GMT Friday
Dollar/yen: UP at 110.43 yen from 110.16 yen
Pound/dollar: DOWN at $1.2686 from $1.2697
Oil – West Texas Intermediate: UP 48 cents at $45.81 per barrel
Oil – Brent Crude: UP $1.58 at $53.78 per barrel
New York – Dow: DOWN 0.3 percent at 23,062.40 (close)
London – FTSE 100: UP 2.3 percent at 6,733.97 (close)
BSS/AFP/HR/1108