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Trade hopes lift Asia markets but investors eye deadline
HONG KONG, Dec 6, 2019 (BSS/AFP) – Optimism over the China-US trade talks
kept Asian markets buoyant on Friday, with investors betting the two will
eventually sign a partial deal, though they remain nervous as next week’s
deadline for fresh tariffs draws closer.
Sentiment across trading floors has ebbed and flowed through the week as
observers try to gauge the state of play in the long-running negotiations,
with both sides making positive, then negative comments on the outlook.
Donald Trump caused upheaval by saying he would be happy if a pact was not
signed until after next November’s elections, reimposed tariffs on Argentina
and Brazil and threatened France with 100 percent levies over a digital tax.
The passage of a House of Representatives bill in support of minority
Uighurs in China also riled a Beijing still angry at Trump’s decision to pass
a law backing Hong Kong protesters.
But talks appear back on track after reports US officials were hopeful an
agreement would be signed, while the president said Thursday things were
“moving along well”.
The latest soundings allowed investors to return to the buying that has
helped propel global markets for weeks, sending Wall Street to multiple
records.
China on Friday offered its latest olive branch, saying it would waiver
tariffs on “some” imports of key US soybean and pork imports, providing extra
support to traders.
Hong Kong climbed more than one percent, Shanghai and Sydney added 0.4
percent, while Tokyo, Singapore, Wellington, Manila, Bangkok and Jakarta each
gained 0.2 percent.
Seoul jumped more than one percent and Taipei edged up 0.1 percent but
Mumbai slipped 0.4 percent.
In early trade London and Frankfurt each rose 0.3 percent, while Paris
gained 0.2 percent.
“It’s been rather a strange week for global equity markets,” said Michael
Hewson at CMC Markets UK. “Moving from an expectation that we could well see
some movement on trade between the US and China in the next couple of weeks,
to the prospect that any solution may well not happen until after the next
presidential election.
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“As a result of these mixed signals investors appear to be taking a more
cautious view as to what may happen next.”
Traders remain on edge just over a week until December 15 — the day on
which the US is due to impose tariffs on more China goods.
“Things are looking modestly positive, but that can change on a dime,”
Michael Reynolds, investment strategy officer at Glenmede Trust, told
Bloomberg News.
“We’re expecting trade to dominate the narrative for the next week and a
half as we approach that December 15 deadline.”
– ‘No choice but to act’ –
Still, analysts say progress in the talks is key for both sides.
The next round of tariffs “will punish the US consumer as prices of
children’s toys, laptops, and other electronics will jump higher”, said
Edward Moya at OANDA.
“It could be political suicide in some battleground states if Trump went
forward with these next rounds of tariffs.”
He added that that while traders were hopeful the US will not go ahead
with the levies, markets “are sceptical we will see a phase-one deal this
side of the Christmas holiday”.
Investors are also keeping a close eye on events in Washington after top
Democrat Nancy Pelosi gave the green light to draft articles of impeachment
against Trump, saying his alleged abuse of power “leaves us no choice but to
act”.
Oil prices ticked lower after a meeting of OPEC and other major producers
led by Russia broke up without a solid agreement on cutting output further.
They had been considering cuts above their previous agreement to reduce
output by 1.2 million barrels per day from October 2018 levels but could not
finalise a figure after six hours of talks.
Russian Energy Minister Alexander Novak said a preliminary gathering of
ministers had recommended an additional 500,000 barrel-per-day reduction for
the first quarter of 2020. But analysts said that disappointed markets who
had been hoping for more.
Also on the radar is the release later in the day of key US jobs data that
will provide a fresh snapshot of the world’s top economy and could help
dictate Federal Reserve monetary policy and possibly Trump’s trade moves.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 23,354.40 (close)
Hong Kong – Hang Seng: UP 1.1 percent at 26,498.37 (close)
Shanghai – Composite: UP 0.4 percent at 2,912.01 (close)
London – FTSE 100: UP 0.3 percent at 7,155.76
Pound/dollar: DOWN at $1.3158 from $1.3161 at 2200 GMT
Euro/pound: UP at 84.43 pence from 84.38 pence
Euro/dollar: UP at $1.1109 from $1.1106
Dollar/yen: DOWN at 108.67 yen from 108.74 yen
West Texas Intermediate: DOWN six cents at $58.37 per barrel
Brent North Sea crude: DOWN five cent at $63.34 per barrel
New York – Dow: UP 0.1 percent at 27,677.79 (close)
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