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Asia markets gain as earnings reports loom
HONG KONG, July 24, 2018 (BSS/AFP) – Asian markets advanced Tuesday, with
Beijing’s planned stimulus measures pushing up Chinese shares as investors
turn their attention to this week’s release of corporate earnings reports.
Tensions persist over a potential global trade war, however, with European
Commission President Jean-Claude Juncker heading to Washington on Wednesday
to meet with President Donald Trump and try to avert an escalation of tit-
for-tat tariffs.
The US leader is already embroiled in a messy trade spat with China and
Europe, while negotiations with Canada and Mexico to revamp the North
American Free Trade Agreement have stalled.
Beijing signalled it would shift to a looser fiscal policy to shield the
world’s second-largest economy from the worsening trade row with Washington,
prompting Chinese shares, buffeted for months by the spat, to make gains.
Shanghai jumped 1.6 percent while Hong Kong advanced 1.3 percent. The
gains were mirrored across Asia, with Tokyo and Seoul both rising 0.5 percent
and Sydney adding 0.6 percent.
Chinese policymakers have had to juggle competing priorities:
transitioning the world’s second-largest economy to an expected era of slower
growth, while also cleansing the financial system of dodgy credit.
That balancing act has become even more tricky as China’s export engine
braces for the impact of US tariffs on Chinese goods, imposed by President
Donald Trump to punish Beijing for “unfair” trade practices.
Premier Li Keqiang stressed the government would accelerate plans to
reduce taxes by more than 1.1 trillion yuan ($160 billion) and to issue 1.35
trillion yuan in local government special bonds for infrastructure.
Beijing was widely expected to ease up on its credit clampdown — a
campaign that has also weighed on Chinese stocks — in light of the new
Trump-era realities.
– Earnings in focus –
MORE/MR/ 1416 hrs
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Focus has also shifted to a round of earnings reports expected this week
from companies ranging from British pharma giant GlaxoSmithKline to Japanese
automaker Mitsubishi Motors to US aerospace titan Boeing.
Tech firms Amazon and Facebook will also report their results later in the
week.
In Europe, shares in French car giant PSA — owner of Peugeot — surged
9.5 percent on strong earnings.
Paris opened 0.4 percent higher while London gained 0.2 percent and
Frankfurt advanced 0.3 percent.
Oil markets slipped after getting a lift on Monday when Trump and Iranian
President Hassan Rouhani engaged in a round of furious sabre-rattling.
Trump’s tweet — all in capital letters, the digital equivalent of
shouting — came after Rouhani warned the US leader on Sunday not to “play
with the lion’s tail”, saying that conflict with Iran would trigger the
“mother of all wars”.
Trump responded: “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL
SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER
SUFFERED BEFORE.”
But the boost to oil markets was short-lived.
“While oil prices were the primary beneficiary of the weekend’s headline
battle between President Trump and Iranian President Rouhani, that boost
started to fizzle as traders then veered to oversupply concerns,” said
Stephen Innes, head of Asia-Pacific trading at Oanda trading group.
“The broader macro picture continues to loom large as Saudi Arabia and
Russia are expanding production to offset the loss of Iran production,” Innes
added.
– Key figures at 0700 GMT –
Tokyo – Nikkei 225: UP 0.5 percent at 22,510.48 (close)
Hong Kong – Hang Seng: UP 1.3 percent at 28,611.65
Shanghai – Composite: UP 1.6 percent at 2,905.56 (close)
London – FTSE 100: UP 0.2 percent at 7,674.17 (open)
Euro/dollar: DOWN at $1.1675 from $1.1694 at 2100 GMT
Pound/dollar: UP at $1.3103 from $1.3102
Dollar/yen: DOWN at 111.22 yen from 111.35 yen
Oil – Brent Crude: UP one cent at $73.07 per barrel
Oil – West Texas Intermediate: DOWN five cents at $67.84 per barrel
New York – Dow: DOWN 0.1 percent at 25,044.29 (close).
BSS/AFP/MR/ 1416 hrs