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Asian markets power ahead on rising trade-talks hopes
HONG KONG, Jan 9, 2019 (BSS/AFP) – Increasing optimism that China and the
US will be able to hammer out a deal to help ease their trade war provided
the impetus for more gains across Asian markets on Wednesday.
After taking a battering in December and suffering a shaky start to 2019,
confidence is slowly returning to equity trading floors, though dealers
remain on edge.
Federal Reserve boss Jerome Powell provided the platform for a rally last
week when he said the central bank had no “pre-set” plan for lifting interest
rates and was “listening” to markets, signalling that the pace of hikes could
slow this year.
Fear of higher borrowing rates was a major cause of last year’s stocks
losses.
The mood among dealers has improved markedly this week as officials from
China and the US hunker down for trade negotiations in Beijing that have
extended into a third day. US President Donald Trump on Tuesday described
them as going “very well”.
Bloomberg also reported White House sources as saying Trump is keen to get
a deal done in order to boost stock markets, which he regards as a gauge of
his success.
Also, the Wall Street Journal said the two were moving in the right
direction, with China ready to buy more US goods and services, while further
talks at Cabinet level were being lined up next week.
The progress in talks “is fuelling investor optimism suggesting there
might be a light at the end of the trade war tumultuous tunnel”, said Stephen
Innes, head of Asia-Pacific trade at OANDA.
In morning trade Hong Kong rose 2.4 percent and Shanghai added 1.6
percent, while Tokyo went into the break 1.3 percent higher.
Sydney jumped 0.9 percent with Singapore, while Taipei, Manila and
Wellington were each more than one percent higher. There were also healthy
gains in Jakarta.
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– New-found confidence –
Seoul added 1.8 percent as North Korean leader Kim Jong Un visits Beijing
with speculation swirling that he will meet Trump for a second summit later
this year.
The gains also come after a strong reading on US jobs creation Friday,
which soothed worries that the US economy was slowing down, and ahead of the
corporate earnings season.
“When the dust settles, if it ever does, the fear of recession will prove
to be premature,” Bob Doll, an analyst at Nuveen Asset Management, told
Bloomberg TV.
“We will have growth, yes, slowed from the 2018 pace and we will have…
earnings, yes, slowed from the 2018 pace, but acceptable for investors and
that will allow equity markets to move higher.”
The dollar continued to face selling against higher-yielding currencies as
a new-found confidence saw investors seek out riskier assets.
The South African rand, Australian dollar and South Korean won were among
the best performers.
Oil prices — which have tumbled in recent months partly because of
worries about the impact on demand of the China-US trade war — were also up
with WTI back at about $50 for the first time in more than three weeks.
WTI and Brent are up around 10 percent already this year, having plunged
by about a third from their four-year highs touched in early October on
supply-and-demand worries.
The gains have also been helped by hopes that OPEC and other major
producers including Russia will put the brakes on output this year.
“The market is clearly rebounding from sharply oversold territory,” said
Michael Tran, commodities strategist at RBC Capital Markets LLC. “The macro
outlook looks and feels a lot less dire than it did just a couple of weeks
ago.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 1.3 percent at 20,455.74 (break)
Hong Kong – Hang Seng: UP 2.4 percent at 26,498.71
Shanghai – Composite: UP 1.6 percent at 2566.22
Dollar/yen: DOWN at 108.77 yen from 108.79 at 2200 GMT
Euro/dollar: UP at $1.1458 from $1.1440
Pound/dollar: UP at $1.2740 from $1.2713
Oil – West Texas Intermediate: UP 57 cents at $50.35 per barrel
Oil – Brent Crude: UP 43 cents at $59.15 per barrel
New York – Dow: UP 1.1 percent at 23,787.45 (close)
London – FTSE 100: UP 0.7 percent at 6,861.60 (close)
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