Asian markets extend gains on cautious trade optimism

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HONG KONG, Feb 19, 2019 (BSS/AFP) – Asian markets mostly rose Tuesday with
investors cautiously optimistic that China and the US can reach a deal ending
their trade war as the two sides prepare to resume talks this week.

With New York closed for a public holiday there were few catalysts to
drive buying, though the release of Federal Reserve minutes on Wednesday will
be pored over for an idea of the bank’s interest rate plans.

Top-level officials from the world’s two biggest economies will reconvene
in Washington after a series of negotiations in Beijing last week, with the
US side telling Donald Trump they had been “very productive”.

The positive tone from the diplomats, and the president’s indication he
could extend a deadline for agreement, boosted regional markets Monday,
extending a 2019 rally fuelled by optimism of an end to the nearly year-long
tariffs spat.

Shanghai added 0.3 percent, having piled on more than two percent Monday,
while Hong Kong rose 0.2 percent and Tokyo finished the morning 0.1 percent
higher.

Sydney gained 0.5 percent, Singapore put on 0.3 percent and Taipei 0.2
percent, with Seoul flat and Wellington marginally lower.

– Britain’s Labour strife –

However, OANDA senior market analyst Jeffrey Halley warned of trouble
ahead if Chinese and US officials do not agree a deal.

“The rallies (Monday) were impressive given the talks ended last week
without any concrete results and have yet to even recommence in Washington
this week due to the US public holiday,” he said.

“Without sounding like a damp squib, there is now a vast amount of
‘optimism’ baked into currency, stock and energy market prices globally and
precisely zero concrete detail. The unwind, should no deal be struck, could
be very ugly.”

Oil prices were mixed after rallying Monday on trade talks hope and signs
that OPEC and other key producers are narrowing output.

“Saudi Arabia seems willing to do whatever is necessary to reach levels of
$80 a barrel, and judging by the price reaction, they’re on track,” said
Eugen Weinberg, head of commodities research at Commerzbank AG.

“Even rather bearish factors, like a stronger-than-expected rise in US oil
production, does not seem to derail the price recovery.”

On currency markets the pound was down, with uncertainty fanned by news
that seven pro-remain MPs had split from Britain’s opposition Labour Party
over its handling of Brexit and a row over antisemitism.

The move “looks awfully like a bungled mess of the creation of a new
party, which we think is more likely to be pound-negative… by giving Brexit
a less effective opposition”, said Peter Chatwell, head of European rates
strategy at Mizuho International, told Bloomberg News.

He added that it left both main parties “with clear pro-Brexit mandates”.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 21,297.67 (break)

Hong Kong – Hang Seng: UP 0.2 percent at 28,403.00

Shanghai – Composite: UP 0.3 percent at 2,761.59

Dollar/yen: DOWN at 110.50 yen from 110.61 yen at 2200 GMT

Euro/dollar: DOWN at $1.1304 from $1.1309

Pound/dollar: DOWN at $1.2898 from $1.2929

Oil – West Texas Intermediate: UP 12 cents at $55.71

Oil – Brent Crude: DOWN 43 cents at $66.07 per barrel

New York – CLOSED for bank holiday

London – FTSE 100: DOWN 0.2 percent at 7,219.47 (close)

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