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Asian markets enjoy much-needed rally but tariffs tensions reign
HONG KONG, May 10, 2019 (BSS/AFP) – Shanghai led gains across Asian
markets Friday at the end of a torrid week for equities, with investors
keeping a nervous eye on China-US trade talks and taking heart from positive
comments Donald Trump on the prospects for a deal.
There was no comment from either side after the first day of high-stakes
negotiations in Washington between Chinese Vice Premier Liu He, US Trade
Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
And while US tariffs are due to more than double on $200 billion of
imports at 0401 GMT — with China expected to retaliate — there are hopes
the economic superpowers will be able to reach a deal to avert a trade war
that could shatter global growth and batter markets.
After a week in which trading floors have been a sea of red, regional
equities were on the up Friday, with optimism boosted by Trump saying he had
received a “beautiful letter” from China’s Xi Jinping and that it was
“possible” to get a deal.
Shanghai, which lost more than seven percent from Monday to Thursday,
climbed more than two percent in early trade, while Hong Kong piled on 1.7
percent.
Tokyo went into the break 0.7 percent higher, while Singapore also gained
0.7 percent, Sydney added 0.3 percent and Taipei rose 0.8 percent.
Seoul jumped 0.8 percent as investors brushed off news that North Korea
had tested a long-range weapon, which is likely to raise tensions after the
breakdown of denuclearisation talks with the United States.
– ‘The peace is fragile’ –
However, while markets are on the up, analysts said there remains a lot on
uncertainty over the trade talks.
“Markets will be in a holding pattern as we await the outcome of the
meeting,” said Khoon Goh, head of Asia research at ANZ Bank. “If there is a
breakdown and the tariffs go up, then we will see a risk-off tone in
markets.”
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OANDA senior market analyst Jeffrey Halley said the fact that tariffs were
to rise midway through the talks gave them “precious little time to come up
with something that satisfies both sides”.
Although markets are up, “the peace is fragile, and it won’t take much
today to panic investors into heading for the exit door en masse,” he added.
Halley also warned that while Trump praised Xi’s letter it was hard “to
see how either of these two presidents will ever manage to really share the
toys and play nicely on the global stage”.
In worrying sign, Hu Xijin, editor-in-chief of the Global Times — which
is published by the Communist Party’s People’s Daily — cited a source
familiar with the talks as saying there is “zero” chance of a deal before
Friday.
“If it is that bad, the real suspense is whether the two sides will
continue negotiations after Friday,” Hu said.
The slightly improved sentiment, and bargain-buying provided support to
higher-yielding, riskier currencies — though the yuan continues to wallow
around four-month lows.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.7 percent at 21,545.72 (break)
Hong Kong – Hang Seng: UP 1.7 percent at 28,780.16
Shanghai – Composite: UP 2.4 percent at 2,919.69
Euro/dollar: UP at $1.1232 from $1.1218 at 2050 GMT
Pound/dollar: UP at $1.3013 from $1.3011
Dollar/yen: UP at 109.87 yen from 109.71 yen
Oil – West Texas Intermediate: UP 66 cents at $62.36 per barrel
Oil – Brent Crude: UP 70 cents at $71.09 per barrel
New York – Dow: DOWN 0.5 percent at 25,828.36 (close)
London – FTSE 100: DOWN 0.9 percent at 7,207.41 (close)
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