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Asian markets back on front foot as trade hopes return
HONG KONG, Dec 5, 2019 (BSS/AFP) – Asian markets swung back to a rally
Thursday on renewed hopes for the China-US trade talks after a report said a
deal could be finalised by the end of next week.
The story came a day after Donald Trump had poured freezing water on the
prospects for an agreement by suggesting he would be happy waiting until
after the 2020 presidential election before signing off on one.
It also provided a much-needed boost to investors following disappointing
US data on jobs and the key services sector.
Bloomberg News reported that US negotiators expected a deal to be
completed before a new round of US tariffs on China is due to hit on December
15.
It quoted unnamed sources as saying Trump’s comments that he had no
deadline and “in some ways, I like the idea of waiting until after the
election” should not have been taken as a sign the talks had stalled.
Markets globally turned south following the remarks, with observers
suggesting US bills supporting Hong Kong protesters and minority Uighurs in
China had also dented the chances of a pact being signed.
AxiTrader’s Stephen Innes said weak US data played an important role in
Trump’s thinking regarding the trade talks.
“These are critical chunks of the economy the president must defend, but
the more vulnerable data also provides inferior optics for his election 2020
campaign,” he wrote in a note.
“If these gloomy forward economic gauges start to leak into the
consumption and/or employment sectors, one would have to assume that
President Trump, from a purely economic perspective, would be as motivated as
(Xi Jinping) to table a trade deal sooner than later”, he said.
– ‘Walking up a down elevator’ –
However, he added that “it really feels like we’re always walking up a
down (escalator) when it comes to navigating these never-ending US-China
hostilities”.
Hong Kong and Shanghai each rose 0.6 percent in the morning, Tokyo went
into the break 0.7 percent higher, Sydney put on one percent and Singapore
was 0.5 percent higher.
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Wellington, Taipei and Jakarta also posted gains, though Seoul was flat.
On the outlook for markets, National Australia Bank’s Ray Attrill said it
was significant that the US side was now talking about removing tariffs.
“To date, it has only been the Chinese side who have been talking about a
tariff rollback as likely to form part of any phase-one trade agreement. Here
the US side is acknowledging that this is on the table,” he said.
And Kristina Hooper, chief global market strategist at Invesco, told
Bloomberg TV: “If we do just muddle along and there aren’t the tariff
increases on December 15, we’ll probably see something of a stable stock
market environment.”
However, any negative news “could be the spoiler for what otherwise would
be a fairly solid month for stocks”.
Oil prices saw a small retreat a day after enjoying a surge on reports
that OPEC and other major producers were ready to announce fresh output cuts.
Fresh trade deal hopes and US figures showing a drop in stockpiles,
pointing to improved demand, also provided a bump to the commodity.
The pound held around its highest levels against the euro since May 2017
after fresh polls indicated Prime Minister Boris Johnson’s Conservatives
would win a majority at next week’s general election, giving him a mandate to
push through his Brexit deal and avert a no-deal divorce.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.7 percent at 23,294.99 (break)
Hong Kong – Hang Seng: UP 0.6 percent at 26,226.53
Shanghai – Composite: UP 0.6 percent at 2,894.64
Pound/dollar: UP at $1.3112 from $1.3102 at 2145 GMT
Euro/pound: DOWN at 84.50 pence from 84.52 pence
Euro/dollar: DOWN at 1.1083 from 1.1076
Dollar/yen: UP at 108.90 from 108.88 yen
West Texas Intermediate: DOWN 23 cents at $58.20 per barrel
Brent North Sea crude: DOWN 10 cents at $62.90 per barrel
New York – Dow: UP 0.5 percent at 27,649.78 (close)
London – FTSE 100: UP 0.4 percent at 7,188.50 (close)
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