HONG KONG, Jan 18, 2019 (BSS/AFP) – Asian markets rallied Friday as
another broadly positive week drew to a close, with investors cheered by a
report that the US was considering lifting tariffs on China as officials look
to hammer out a trade deal.
Optimism that the world’s top two economies are on course to reach a deal
ending their long-running trade row has helped boost equities across the
world this year.
And while news that the US was carrying out a criminal probe into Chinese
tech giant Huawei caused a wobble Thursday, the rally resumed after the Wall
Street Journal story on tariff-lifting broke.
The paper reported Treasury Secretary Steven Mnuchin had raised the idea
with Trade Representative Robert Lighthizer of removing some or all levies on
Beijing in return for structural reforms.
It said the move was part of a bid to reassure markets and bolster the
odds of a bigger trade deal, ending a months-long saga that is beginning to
impact economies around the world, particularly China.
However, Treasury Department told AFP that no formal recommendation had
been made by either Mnuchin or Lighthizer in the talks, which were “nowhere
near completion”.
Still, investors remained upbeat.
Hong Kong rose more than one percent and Shanghai added 0.8 percent while
Tokyo ended the morning 1.3 percent higher. Sydney, Seoul and Singapore were
each 0.5 percent higher while Wellington and Taipei added 0.3 percent. Manila
and Jakarta were also up.
“The US government has said that there have been no formal talks to scale
back tariffs, but the market saw the half glass full as the reports signal
that concessions are in the works,” said Alfonso Esparza, senior market
analyst at OANDA.
However, there was still scepticism among analysts, with the two sides
still far apart on a number of issues, particularly regarding intellectual
property.
– Crude on the rise –
“Certainly evidence that the administration is approaching a deal would be
good news,” Laura Rosner, senior economist at MacroPolicy Perspectives, said.
“We’ve heard noise around trade policy before though, so I would want to make
sure the progress happens and sticks.”
On currency markets the pound edged up and was sitting around two-month
highs against the dollar as dealers bet that Britain will not leave the
European Union without a deal.
After her grand Brexit plan was soundly rebuffed by MPs this week, British
Prime Minister Theresa May has called cross-party talks to put together a
“Plan B” with a more palatable agreement by Monday.
Still, if that does not work, there is a growing expectation that the
March 29 exit deadline will be pushed back to give May more time to reach
another deal or possibly call another referendum.
Oil prices rose on the China-US tariffs report and after OPEC said it had
cut output in December before a new agreement to limit supply took effect.
Both main contracts are up around a fifth since the end of December,
thanks to an agreement to cut output by OPEC and other key producers
including Russia. That followed almost three months of losses that wiped
around 40 percent off prices that was fuelled by supply and demand worries.
And while the commodity is on the up, there are still concerns about the
impact of a slowing global economy.
“As global growth stalls so does the appetite for crude,” said Esparza at
OANDA. “Demand remains the biggest uncertainty. Positive trade headlines
could boost energy prices as supply remains a tug-o-war between rising (US)
shale production and OPEC agreed limits.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 1.3 percent at 20,674.92 (break)
Hong Kong – Hang Seng: UP 1.1 percent at 27,042.08
Shanghai – Composite: UP 0.7 percent at 2,577.81
Pound/dollar: UP at $1.2988 from $1.2937 at 2130 GMT
Euro/dollar: UP at $1.1395 from $1.1391
Dollar/yen: UP at 109.31 yen from 109.19
Oil – West Texas Intermediate: UP 52 cents at $52.59 per barrel
Oil – Brent Crude: UP 43 cents at $61.61 per barrel
New York – DOW: UP 0.7 percent at 24,370.10 (close)
London – FTSE 100: DOWN 0.4 percent at 6,834.92 (close)