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ASIA-MARKETS-UPDATE
Asian markets tick up after Trump tweets but uncertainty remains
HONG KONG, May 15, 2019 (BSS/AFP) – A series of tweets by Donald Trump
playing up the chances of a trade deal with China provided a much-needed
boost to Asian equities Wednesday but investors trod cautiously as analysts
warned of more volatility to come.
After more than doubling tariffs on $200 billion of Chinese goods last
week — sparking retaliation from Beijing — the US president has threatened
to hit a further $300 billion with more levies if he does not get his way in
high-stakes talks.
However, in a series of tweets Tuesday, Trump gave markets some hope that
a deal between the economic titans will eventually be struck.
“When the time is right we will make a deal with China”, he wrote, adding
that his “respect and friendship with President Xi (Jinping) is unlimited”.
He went on to say: “We can make a deal with China tomorrow, before their
companies start leaving so as not to lose USA business” and said it would be
“game over” if the Federal Reserve “matched” Chinese support measures.
The remarks, while again accusing China of backsliding in the trade talks,
provided some optimism, while weak data out of China on industrial output,
retail sales and investment highlighted weakness in the economy but fuelled
hopes for growth-boosting measures.
Shanghai ended 1.9 percent higher and Hong Kong put on 0.5 percent.
“This sharp slowdown increases the likelihood that we will probably see
further attempts by China to help stimulate its economy, as well as raising
concerns that any hopes of a Chinese economic rebound helping to prompt a
global pickup in economic activity look a little bit forlorn at this point in
time,” said Michael Hewson, chief market analyst at CMC Markets UK.
Tokyo climbed 0.6 percent, Sydney rose 0.7 percent and Seoul added 0.5
percent. Seoul, Taipei, Wellington, Manila and Mumbai were also well in
positive territory but Singapore and Jakarta fell.
In early trade, London was flat, Paris shed 0.4 percent and Frankfurt fell
0.3 percent.
MORE/HR/1438
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– ‘Period of volatility’ –
Both the US and China have said they will resume talks in Beijing but with
no date yet set, dealers are looking ahead to a possible meeting between
Trump and Xi at the G20 in Japan at the end of June.
“It’s just too early to tell if this is a buy (on equity markets), on
slightly oversold conditions, or if it’s the start of stabilisation,” Gina
Martin Adams, chief equity strategist at Bloomberg Intelligence, told
Bloomberg TV.
“Our working thesis is that we’re going to be in for a period of
volatility for most of the next month as we await the G20 meeting.”
And OANDA senior market analyst Jeffrey Halley warned that “sentiment
remains fragile and subject to the whims of trade headlines on either news
tickers or social media accounts”.
He added that while some gains could be expected “one suspects a lot of
money will remain on the sidelines as we await more clarity on the trade
situation”.
Oil prices dipped in Asian trade on Wednesday following a surprising rise
in US crude stockpiles but remain propped up by tensions in the Middle East.
Major producer Saudi Arabia said Tuesday a pumping facility on the Red Sea
had been attacked by armed drones, an act claimed by Yemeni rebels.
That came days after sabotage attacks on four ships, including two Saudi
Arabian oil tankers, in the United Arab Emirates.
“Trade issues will continue to cap gains in Asia, but if anything, the
incidents on opposite sides of Saudi Arabia will bring home how vulnerable
the flow of oil is from the Middle East,” said Halley.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 0.6 percent at 21,188.56 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 28,268.71 (close)
Shanghai – Composite: UP 1.9 percent at 2,938.68 (close)
London – FTSE 100: FLAT at 7,243.97
Euro/dollar: UP at $1.1209 from $1.1208 at 2040 GMT
Pound/dollar: UP at $1.2917 from $1.2907
Dollar/yen: DOWN at 109.53 yen from 109.62 yen
Oil – West Texas Intermediate: DOWN 60 cents at $61.18 per barrel
Oil – Brent Crude: DOWN 36 cents at $71.88 per barrel
New York – Dow: UP 0.8 percent at 25,532.05 (close)
BSS/AFP/HR/1440