Asian markets extend gains as optimism slowly returns

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HONG KONG, Sept 11, 2019 (BSS/AFP) – Asian markets mostly rose on Wednesday
with a broadly upbeat tone across trading floors ahead of major meetings at
the European and US central banks, while there is also a growing sense of
optimism over China-US trade talks.

News that Donald Trump had fired his fervently hawkish national security
adviser also lifted sentiment with analysts saying it could see the White
House take a less strident approach and ease geopolitical tensions.

With the global economy stuttering attention has turned increasingly to
central banks as investors look for more stimulus.

On Thursday the European Central Bank holds one of its most anticipated
gatherings and hopes are for a series of fresh measures including a possible
interest rate cut, fresh bond-buying quantitative easing (QE) or other
loosening tools.

That is followed by the Federal Reserve’s board meeting next week, where it
is tipped to announce another reduction in borrowing costs as the world’s top
economy — which has so far been the strongest globally — stutters.

“With the expectation of the resumption of quantitative easing by the
ECB… and a rate cut by the Federal Reserve next week, the risk environment
has solidified and tempted investors out of hiding from the bond markets and
back into equities,” said Jeffrey Halley, senior market analyst at OANDA.

In early trade Hong Kong was up 0.4 percent, while Tokyo finished the
morning 0.6 percent higher and Singapore put on 0.4 percent. Seoul rose 0.5
percent, Sydney and Taipei each added 0.2 percent, while Manila and Jakarta
posted gains.

However, Shanghai was marginally lower and Wellington tumbled more than one
percent as Prime Minister Jacinda Ardern’s government was rocked by its
handling of sexual assault allegations against a top Labour Party staffer.

Dealers are also awaiting the latest developments in trade talks between
China and the US ahead of next month’s planned top-level meeting, with both
sides sounding less terse in recent statements, which has lifted hopes.

– Lower war-risk premium –

Trump’s decision to sack John Bolton as leading security adviser raised the
possibility of an easing of tensions between the US and several nations,
particularly Iran.

The controversial Bolton was closely linked to the invasion of Iraq and
other past aggressive US foreign policy decisions, and was seen as one of the
main driving forces in Trump’s muscular approach to Tehran, North Korea and
Venezuela, among others.

Stephen Innes at AxiTrader said that while the move did not necessarily
mean a huge change in policy direction, “it does eliminate the most vocal
advocate for US military-enforced regime change in the Trump administration”.

He added that “from a geopolitical risk perspective, it does lessen war
risk premiums, especially in Syria, Venezuela, and Iran and opens the door to
more friendly discussion with North Korea”.

However, the possibility of a dialling down in the stand-off between the US
and Iran led to a plunge Tuesday in the price of oil, with WTI diving almost
three percent from an intraday high and Brent shedding 2.5 percent.

The two contracts later clawed back some of the losses on bargain-buying
expectations for more output cuts by leading producers led by Saudi Arabia.

In share trading companies linked to Apple enjoyed healthy buying after the
US tech giant unveiled new iPhones, including a lower-priced offering, and
set launch dates for its original video offering as well as its game
subscription service.

In Tokyo, Alps Alpine surged three percent, Japan Display put on nearly
three percent and Sharp rallied more than four percent, while LG Display in
Seoul was up two percent in Seoul. Taipei-listed Foxconn rose 0.2 percent.

On forex markets the pound held its recent gains as Prime Minister Boris
Johnson said he was pushing to strike a divorce agreement with the European
Union, having lost a series of key votes to MPs opposed to a no-deal Brexit.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.6 percent at 21,514.14 (break)

Hong Kong – Hang Seng: UP 0.4 percent at 26,784.99

Shanghai – Composite: FLAT at 3,020.13

Pound/dollar: DOWN at $1.2348 from $1.2357 at 2050 GMT

Euro/pound: UP at 89.47 pence from 89.37 pence

Euro/dollar: UP at $1.1047 from $1.1042

Dollar/yen: UP at 107.64 yen from 107.53 yen

West Texas Intermediate: UP 45 cents at $57.85 per barrel

Brent North Sea crude: UP 40 cents at $62.78 per barrel

New York – Dow: DOWN 0.3 percent at 26,909.43 (close)

London – FTSE 100: UP 0.4 percent at 7,267.95 (close)

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