HONG KONG, Dec 4, 2018 (BSS/AFP) – Asian markets mostly dropped Tuesday as
the previous day’s euphoria over the China-US trade ceasefire gave way to
questions about whether the two can ultimately resolve their differences.
However, oil prices continued to rise, building on Monday’s surge fuelled
by the agreement as well as news of a Russia-Saudi Arabia pact to cap output.
Global investors were given some much-needed Christmas cheer at the weekend
after Donald Trump and Xi Jinping called a halt to their painful tariffs
battle for 90 days while they try to resolve their differences.
The news lit a fuse under markets after a torrid year that has been
dominated by the trade war between the world’s top two economies, which many
fear will hit global growth.
However, there is concern that the three month grace period will not be
enough for them to hammer out agreements on key issues, particularly on
intellectual property protection.
“Can the US and China really resolve their differences in 90 days?” asked
Rodrigo Catril, senior strategist at National Australia Bank.
“It seems that more details and signs of progress will be needed if the
initial trade truce warm fuzzy feeling is to be sustained.”
Also, later Monday there was uncertainty about Trump’s claims in a tweet
that China had agreed to slash tariffs on car imports, with two of his top
advisers unable to provide clarity on the issue.
– Oil extends gains –
“That’s what happens when you don’t have the detailed negotiations going
into the summit” and end up with the “broad swath of a 35,000-foot deal,”
Bonnie Glaser, a China expert at the Center for Strategic and International
Studies in Washington, said.
“It’s risky. There’s certainly no guarantees that it will produce the
outcomes that we want.” Hong Kong dipped 0.3 percent, Tokyo fell 0.7 percent
by lunch, Shanghai was 0.2 percent off and Sydney lost 0.6 percent.
Singapore and Seoul each dropped 0.5 percent, while Taipei eased 0.3
percent though there were gains in Wellington, Manila and Jakarta.
Still, Jeff Kleintop, chief global investment strategist at Schwab Center
for Financial Research remained upbeat.
“It’s easy to see the trade deal as a half empty (glass) — that it’s just
a postponement and that they’ll work together but that there really isn’t any
kind of resolution,” he said. “But I think you can see it as a half glass
full.”
On oil markets both main contracts posted more healthy gains, adding more
than one percent, having racked up gains of almost four percent Monday on the
trade deal, the Russia-Saudi output agreement and a cut in production in
Canada.
Focus is now on a meeting of OPEC and non-OPEC members in Vienna at the
weekend, where they will reveal how much and for how long they will reduce as
they look to stabilise the crude market.
On currency markets the pound is struggling to bounce back against the
dollar as MPs prepare to debate Prime Minister Theresa May’s Brexit deal as
she struggles to win over enough people to support it. Failure to push the
agreement through parliament could bring down her government, fuelling more
uncertainty in the country.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.7 percent at 22,412.53 (break)
Hong Kong – Hang Seng: DOWN 0.3 percent at 27,106.64
Shanghai – Composite: DOWN 0.2 percent at 2,650.57
Oil – West Texas Intermediate: UP 62 cents at $53.57 per barrel
Oil – Brent Crude: UP 62 cents at $62.31 per barrel
Euro/dollar: UP at $1.1357 from $1.1353 at 2200 GMT
Dollar/yen: DOWN at 113.43 yen from 113.59
Pound/dollar: UP at $1.2730 from $1.2727
New York – Dow Jones: UP 1.1 percent at 25,826.43 (close)
London – FTSE 100: UP 1.2 percent at 7,062.41 (close)