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Asia markets mixed as Trump-Xi takes centre stage
HONG KONG, Nov 28, 2018 (BSS/AFP) – Asian markets mostly rose Wednesday as
they await this weekend’s high-stakes meeting between Donald Trump and Xi
Jinping, but dealers remain cautious with the threat of an escalation in the
trade war if the pair fail to reach a deal.
Also on the radar is a speech by Federal Reserve boss Jerome Powell, which
will be pored over for signs of an easing in its pace of interest rate hikes
after his deputy hinted at gradual rises and Trump hit out at recent
increases.
Wall Street provided a positive lead following soothing comments from top
White House economic advisor Larry Kudlow on the chances of a trade deal when
the leaders of the world’s top two economies meet Saturday.
“The president said there’s a good possibility we can make a deal and he’s
open to it but certain conditions have to be met, certain things have to be
changed,” Kudlow told a White House briefing.
The remarks came a day after the president warned that if he cannot reach
a deal with Xi he expects to increase tariffs on $250 billion of Chinese
goods and impose levies on all the other goods the US imports from the
country.
While observers do not expect a wide-ranging deal to be made at the
meeting, which takes place on the sidelines of a G20 summit in Buenos Aires,
there is the possibility of an agreement that will allow the two to reach a
consensus down the line.
“It will depend a lot about the kind of comments that will come out after
the meeting,” Massimiliano Bondurri, founder and chief executive officer of
SGMC Capital in Singapore, told Bloomberg TV.
“We don’t expect anything saying a deal will never be found, we expect
some formal comments will be made as in discussions will be ongoing, but we
haven’t found any agreement as of yet, so that’s likely to weigh on the risk
sentiment on global markets.”
– Eyes on Fed’s Powell –
In early trade Hong Kong and Shanghai were each up 0.9 percent while Tokyo
rallied 1.1 percent.
Sydney eased 0.2 percent and Singapore dropped 0.1 percent but Seoul was
0.1 percent higher while Wellington, Taipei, Mumbai and Jakarta were all
slightly stronger.
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Powell’s speech later in the day has taken on more significance after
Trump said he was “way off base” for continuing with his interest rate hikes.
“I’m doing deals and I’m not being accommodated by the Fed,” Trump told
the Washington Post in his latest swipe at the central bank boss he
handpicked for the job. Powell has dismissed similar attacks from the White
House in the past.
While the bank is expected to lift rates next month, traders will be
looking to see if the Fed chief indicates a slowing of its tightening drive
in light of softer readings at home and signs of global weakening.
On Tuesday Fed Vice Chairman Richard Clarida that hinted at a more
cautious approach.
Expectations that rates would continue to rise through to 2020 — making
it more expensive to borrow for investing — have weighed on global markets
this year.
In foreign exchanges the pound continues to struggle after tumbling
Tuesday on Trump’s warning that Theresa May’s EU divorce deal could damage
her chances of striking a post-Brexit trade agreement with the US.
The British prime minister, who has embarked on a nationwide drive to
lobby the public, is also facing an uphill struggle to get her plan through
parliament, which is mostly opposed to it. A vote is slated to take place on
December 11.
– Key figures around 0350 GMT –
Tokyo – Nikkei 225: UP 1.1 percent at 22,197.85
Hong Kong – Hang Seng: UP 0.9 percent at 26,575.56
Shanghai – Composite: UP 0.9 percent at 2,596.84
Pound/dollar: UP at $1.2738 from $1.2729 at 2140 GMT
Euro/pound: DOWN at 88.63 pence from 88.71 pence
Euro/dollar: DOWN at $1.1289 from $1.1293
Dollar/yen: DOWN at 113.77 yen from 113.79
Oil – West Texas Intermediate: UP 25 cents at $51.81 per barrel
Oil – Brent Crude: UP 22 cents at $60.43 per barrel
New York – Dow Jones: UP 0.4 percent at 24,748.73 (close)
London – FTSE 100: DOWN 0.3 percent at 7,016.85 (close)
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